Question: Can you please explain the Oder Driven Fixed Income Trade Execution Model?
Answer: In the order-driven model a participants/client (Liquidity Taker) place an order against whatever price quotes was provided by another participants/client. This other party is known as any of the below - Price makers - Liquidity providers - Market makers. Trade Executions happens if orders submitted are matched against price quotes from other participants like Price Makers. If order matches, then an execution message is generated for both the party liquidity provider and liquidity taker. Usually, odd-lot trading systems are order-driven systems.
Question: What are the Auction Systems in Fixed Income Trading?
Answer: Usually. Auction systems are used for the new issue or any book-building activities. And issuer or issue manager would post the offering details with the information which include - Name of Security - Size available - Any applicable rules of the auction Participants shows the indications of interest and for the placed orders are allocated when auction is closed.
Question: Why Fixed Income trading is moving towards the API(Application Programming Interface) based rather than Graphical Interface?
Answer: Because Fixed Income trading has increased its volume number of transactions and information is not available on single platform for all the transaction done. And API can help in programmatic aggregation of information from multiple and from the electronic platforms, which are competing with each other.
Question: Why GUI based trading in the Fixed Income was considered challenging, initially?
Answer: If you have seen like single and multi-dealer system uses their own proprietary GUI System. It was having a different GUI’s for each individual asset class and even focusing on each individual sectors. And both buyer and seller has to work on different set of GUI’s and caused various issues and also introduced some kind of Risk.