Fix City offers low-cost distribution for IOIs
|Buy-side dealer: In illiquid markets trade indications are of great interest|
The launch of an innovative new service for brokers to communicate indications of interest (IOIs) and trade advertisements to dealers at buy-side firms brings new competition that may benefit investors searching for liquidity in the securities markets.
IOIs in buying or selling a security - which contrast with firm price quotes in specified sizes - are increasingly important. In Europe they are a useful tool for fund managers under regulatory pressure to prove that they are seeking best execution.
In the US, the growth of programme trading strategies has added even more significance to IOIs. "The fragmented nature of the US marketplace has combined with the increased use of electronic trading strategies to dramatically reduce average trade sizes," says Miranda Mizen, senior analyst at TowerGroup's securities and capital markets practice. "Liquidity is increasingly hidden behind electronic trading functionality so IOIs are an important tool."
Bloomberg users tend to make use of the IOI service provided on their terminals and AutEx, a Thomson Financial company, enjoys a near-monopoly among non-Bloomberg users.