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Capital Markets

Best practice in fixed income trading and execution

Best execution is a concern for most fixed income managers. MiFID and other regulatory initiatives are causing managers to take another look at the way they operate in order to ensure that they work to their clients' best advantage. Will Goodhart interviews three leading fixed income managers to learn more about the ways that they manage and evaluate their trading performance.

This article appears courtesy of Global Investor.


European Credit Management (ECM) was founded in 1999 and now employs more than 130 worldwide. Building from €155 million at inception, ECM now has €19 billion under management. The firm manages diversified portfolios of European fixed income credit securities on behalf of institutional clients. Estimated total trading volumes are around 5% of total AUM each month.

Stephen Zinser, CIO at ECM reports that, though few clients have yet shown significant  interest in best execution, the firm is focused on it. Notes Zinser: "Best execution is best achieved in practice by having a strong team with good eyes and a diverse number of counterparties with whom you can transact at all times. You can see who has which 'axe' at any given time.  At the last count, we had 24 lending or credit counterparties with whom we do business.

However, often the worst thing to do is to call up 10 people. The nature of the beast is such that, if you call up 10 counterparties for prices, you may think you've gotten best execution, but, in reality, all you've done is moved the market."

ECM has a prime broker that it uses to clear securities, but, says Zinser: "We're not dependent on them and, in fact, we've never borrowed from them."

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