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Market Voice: Refinitiv and the hunt for liquidity

Ian Mawdsley
Ian Mawdsley
Head of Buy-Side Trading EMEA & APAC, Refinitiv

With markets fragmenting the world over, the search for liquidity continues to provide real complex issues for buy-side traders to contend with on a daily basis. The conundrum of attempting to break the monopolistic hold on financial markets by the exchange monoliths has driven regulators to take action through directives which have resulted in greater choice on where to trade but at what cost?


  1. With increased market fragmentation and the introduction of new regulation, buy-side traders now have greater choice on where to trade.
  2. The search for liquidity continues to present complex issues for traders.
  3. Indications of Interest (IOIs) have now come back into popularity to help market professionals to view and interact with liquidity across the financial markets.

Once upon a time life was simple for folks in the equity markets. Need to find liquidity? Phone your broker on the exchange floor and off he heads to the nearest jobber (market maker) and gets you the price – best execution achieved! Fast forward 30 years and what the portfolio manager would give to return to this lovingly simple scenario. Instead they are pushed to scan through orders showing on a multitude of exchanges and venues, alongside less transparent orders hidden in dark pools, large in scale (LIS) and periodic auction venues together with the revived Systematic Internaliser regime. And the irony is, the regulators want YOU to prove you are achieving the best execution that you can.

So how can we return to simpler days with all this craziness in current market structure? Fintech to the rescue! Us creative little chaps with our round glasses and pocket protectors formerly sneered at many of our front office colleagues, are the new heroes of the financial market. With a small sense of irony, we’re simply bringing back practices that were used back in the ‘good old days’ but with a touch of electronification.

Indications of Interest (IOIs) are neither new in terms of process; they are much the same as a sales trader picking up the phone to a client, or in terms of electronic delivery. Much like many innovations in technology, it simply ‘missed’ first time around. That, despite market participants universally agreeing they were the future back then. But like all good ideas, they simply required a little tweaking and an element of good luck for them to rise to the fore.

So what are they and how are they useful?

IOIs are an electronic message, often blasted out by brokers, when they have an interest to transact in a particular name, normally in above normal market size. There tends to be two dominant types:

  • Natural IOIs, where there is a firm client order, or where a firm has some exposure linked to trading with a client order and has a need to hedge out that position.
  • Unnatural or House Natural (and often called Super) IOIs, where a firm offers to provide liquidity to a client on a principle basis.

Part of the lack of success with IOIs is down to controlling who sees them and why alongside ensuring an IOI marked as Natural really does fit the definition. The buy side can often view the product like many of us do email – many are simply ‘spam’ and others often feel like brokers are ‘fishing’ for information, attempting to weed out where interest may lay without really having to commit to the order.

Hold on – (IOI) En Vogue

As always regulation proves to be the decisive factor in not only changing market structure, but the tools associated with it. MiFID II in particular, much like Dodd Frank in the U.S., has resulted in a move away from traditional trading methods, to a greater push in electronic trading. The need for greater pre and post trade transparency means a strict record of all communication around related transactions is driving the trader towards the tools on the desktop.

This brings the IOI back in fashion and both the buy and sell-side have been quick to embrace the change.  But what’s changed this time around to prevent the problems from the past?

Well first IOIs are now much more targeted in terms of distribution.  Rather than a blast to all clients, brokers have moved to use more ingenious methods to minimize the audience and ensure it’s relevant.  For instance, a number of firms have begun to link customer relationship management (CRM) platforms, allowing for configuration of preferences from the buy-side client ensuring they’re only receiving IOI’s where they have a clear interest.

Second, the introduction of Actionable IOIs has meant the days of brokers sending out less than firm messages can quickly be eradicated. With most EMS and OMS vendors beginning to embrace ‘Click-to-Trade’, the speed of response has improved dramatically, bringing a more useful edge to the use of this form of communication for trading.

Brokers are also becoming smarter with the way they combine electronic trading whilst retaining the benefits attached to high touch relationships.   A number of broker algorithms have been adapted to route block requests from the buy side to automatically create IOIs connected to the cash desks in the banks.

We’ve also begun to see venues themselves begin to issue IOI’s in order to draw participants into resting orders.   This can be particularly useful for Dark Pools, Auction and LIS venues where large blocks rest seeking counterparts to interact with.  Again, this needs to be performed on a strictly targeted basis, otherwise the whole point behind anonymous trading can be lost.

Lastly, house liquidity is back on the menu for listed markets. Despite MiFID II initially being viewed as a move to push all markets on venue, the opposite seems to have been the result, with Systematic Internalisers now executing over 20% of total market volume. This has resulted in a need to communicate transaction interests directly with the buy side and the House IOI proves the best method in providing a direct method of both communication and as close to real-time execution as possible.

How can Refinitiv help?

Refinitiv, formerly the Financial & Risk business of Thomson Reuters have been at the forefront of the IOI business since the mid 1990’s. Today the Autex liquidity suite is used by market professionals globally for viewing and interacting with liquidity across the financial markets.

There are three main offerings available within the Autex suite which can either be accessed directly from our Eikon desktop product and linked to the trading capabilities available within REDI or can be streamed via the FIX protocol directly into a third-party Order Management System:

Autex IOI Liquidity

IOI Liquidity allows the user to view IOI messages published by brokers in a given security.  Users may place filters and alerts into the application based on trading preferences.  Flags are provided to alert users to IOIs that are Natural and / or Actionable.  Orders can then be sent for execution either via our REDI+ trading application or third-party OMS connected to our Autex Trading Routing FIX network.

Source: Eikon/REDI – Click on chart to find out more.

Autex Trade Advertisements

Trade Advertisements allow brokers to show where they have been active in a given security.  As brokers execute orders high or low touch, executions are automatically fed from the sell-side Order Management System into the Autex Trade Ad platform. As with the IOI monitor, users may filter or alert based on personal preferences.

Image of Autex Broker Rankings in Eikon/REDI
Source: Eikon/REDI – Click on chart to find out more.

Autex Broker Rankings

Broker Ranking allows users to see a ranked list of brokers by how much total volume they have advertised in a given security either today or over the last 5, 10, 20 or 30 trading days. Users can filter or sort the data based on the contents of any of the columns displayed.

Image of Autex Broker Rankings in Eikon/REDI
Source: Eikon/REDI – Click on chart to find out more.

Finding out more

Like to discuss how we can help put a magnifying glass over the markets for you?

Please contact your local trading specialist representative or find more about the Autex Liquidity Suite here.


© Refinitiv 2018. All Rights Reserved.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Refinitiv, or any of its respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

All materials provided by REDI Global Technologies LLC (member FINRA and SIPC), REDI Technologies Limited (Financial Conduct Authority (“FCA”) Firm Reference Number (“FRN”) #612490) and their affiliates (collectively, “REDI”) are for informational purposes only.  This document is intended for only institutional accounts (as defined by FINRA) and Eligible Counterparties (as defined by the FCA), and it is not intended for retail investors/persons. REDI services and related services are not available in all jurisdictions.

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