Question: Is there any exchanges which provides a platform for Fixed Income trading and how it helps?
Answer: On exchange buyers and sellers match trades using buy and ask price, this helps in creating liquidity, does not rely on fixed income market makers to provide price quotes. Transactions are conducted anonymously, you can see regularly NYSE Bonds, which provide such platform.
Question: What are the Odd-Lot trading systems for Fixed Income Market?
Answer: Trade should be done with less than $1 MM(Million) of par value, and using odd-lot systems firms buy and sell fixed income securities, which is on behalf of direct retail investors. Because of that reason this system also supports variety of bond types for trading. Some explicit characteristics of such systems are - Most odd-lot systems are multi-dealer - Some dealers who specialize in odd lots can have single-dealer systems. - odd-lot trading systems can be used by institutional customers/investors if they want to trade in odd-lot positions. Some examples of the Odd-Lot Systems are below - Knight BondPoint - BondDesk - TMC.
Question: Which all are the trading models exists for the Fixed Income trade?
Answer: There are following types of trading models available and most prominent are below three - Request for Quote - Order Driven - Auction System It is not necessary a single platform support only one trading model. There could be more than one trading model supported by a single platform.
Question: Can you please explain the Request for Quote trading models in Fixed Income?
Answer: Using Request for Quote a buyer/seller can request pricing on a bond or more than one bonds and from pool of dealers which are part of that platform. Hence, you see RFQ is usually supported by the multi-dealer client system only. Once the quote request received by all of the dealers, dealers can respond with their own price quotes (It depends on trade is requested for buy or sell). They are generally coming with the time limit as well like 2 min. Requestor can wait upto 2 mins for getting the price from all the dealers. Once quotes are received that can then be acted upon and an execution occurs if a bid is hit or an offer is lifted.