Steve Toland, co-founder, TransFICC
Next year will see further market structure changes in fixed income. In dealer to client (D2C) markets for both rates and credits, the number of in-bound RFQs is rising exponentially, driven by all to all trading and the use of algo tools. While many of these tickets are small in size, they provide important data, are useful for dealers with positions and assist with execution statistics. We have already seen some dealers automate these lower value RFQs, but 2025 will see this accelerate to the point where the majority of dealers will need to look at solutions which support auto quoting and/or auto execution.
The velocity of dealer to dealer (D2D) rates markets is increasing and in 2025, we expect more dealers to invest in co-location and access to alternative liquidity sources to place and adjust orders at micro second levels. Ultra-low latency is not simply a nice to have but is needed for dealers to remain competitive.
Next year will also be the year when consolidated tape providers will be selected for the EU and the UK. We expect to hear a great deal about this throughout the year as the market moves towards a more transparent structure.
Liz Kirby, managing director, head of market structure, Tradeweb
One of the key regulatory trends to watch in 2025 will be the SEC’s central clearing mandate for US Treasury transactions, particularly as it extends to repurchase agreement (repo) trades by 2026. While the initial phase of the mandate, slated for December 2025, focuses on US Treasury cash clearing, the most significant changes will come in the final phase, set for 30 June 2026, when repo transactions are brought into scope.
This mandate represents a major shift aimed at enhancing efficiency and transparency in the $4.5 trillion repo market, which has traditionally been relationship-driven, low-margin, and largely uncleared. Given the size, complexity, and short-term nature of this market, implementing central clearing poses some unique challenges. In 2025, our focus will be on collaborating closely with clients and market participants to craft tailored solutions that address these issues.
Derek Kleinbauer, global head of fixed income and equity e-trading, Bloomberg
In 2025, the upcoming US Treasury/repo clearing mandate will introduce some changes to the existing trading workflow and will have an impact whether trades are done via voice or electronically. Bloomberg is working closely with clients to ensure they have access to the necessary workflows in place and are well positioned to meet the mandate requirements.
Algorithmic trading will continue to gain traction across fixed income, as market participants are looking to leverage algos to execute trades, manage their risk, and optimise execution costs. We expect usage to grow in US Treasuries and will eventually be followed by adoption in other asset classes including corporate bonds.
In emerging markets, particularly Asia, we also see real opportunity for growth. In 2024, we’ve observed record electronic trading and a significant growth in trade volumes, average trade size and the number of clients who are active in these markets. This growth may represent an inflection point having been reached in the adoption of electronic execution. With India and Korea being added to major indices, this will further boost the year-over-year growth in electronic trading in emerging markets and the region remains a top focus for us.