This might come as a shock to you, but I’m not a swami, oracle, prophet or futurist. I simply speak with a whole lot of smart technologists and executives, and try to cobble their thoughts to provide a (hopefully) unique view of the state of financial technology and data.

For this column, though, I’m going to present the trading technology space as I see it, using Ion Group as an indicator. But I truly mean this: If you think I’m a bit off base, spot on, or, better yet, way off, I want to hear from you. I’m not an engineer or a data professional, so I’d rather hear from the experts: anthony.malakian@infopro-digital.com.

Ok, to start, when you think about M&A specifically in the realm of trading technology, which companies pop to mind? Of late, likely London Stock Exchange Group I would assume. Thomson Reuters…sorry, Refinitiv…was a big one, but now they’re with LSEG. Maybe Bloomberg. I guess some people might throw FIS up there, especially after nabbing SunGard. Broadridge—especially after the Itiviti deal—is likely on that list. And in my mind, the first two names that jump to mind are SS&C Technologies and Ion.

While growth through acquisition is often necessary, and the idea behind the deal is often logical and even inspiring, the actual integration of systems is the nightmare.

It’s still too early to know LSEG’s grand strategy for integration, but there is concern that the company might be moving too fast and that the Refinitiv integration might be tougher than anticipated. Bloomberg has been the Terminal king for decades simply because of how well integrated its system is, but even BBG is having to work on integrating the back-ends of acquired entities, such as with its Port portfolio management system and its Aim buy-side order management system. FIS…well, I really don’t know what the hell is going on there (and I’m all ears and eyes should someone know). Broadridge is in the midst of a major interoperability project to connect its sea of back-office data to front-office systems. And SS&C is still trying to figure out how best to connect major platforms like Eze, Advent, DST and Algorithmics. Perhaps this is why SS&C has been a bit quiet on the trading tech M&A front after Advent (2015), DST Systems (2018), Eze Software (2018), and Algorithmics (2019)?

Then, of course, there’s Ion. Now, when we’ve written about this Ireland-headquartered vendor with deep Italian roots, the coverage has been critical. We broke the news about the mass exodus that happened at Fidessa after it was acquired by Ion. We also reported that a group of European banks were considering building a fixed-income trading platform so as to allow them to cut ties with Ion. There was also the odd way that it was announced that Ion had acquired List. And there was the partially-failed acquisition of Broadway Technology.

But I’m not here to dwell on the negative. Right now, I’m more interested in how Ion is looking to move forward in a rapidly changing marketplace.

Earlier this year, I met with a technologist who had deep insight into Ion Group’s global tech strategy. They noted that as the pandemic took hold, the vendor began to change its tech integration philosophy and wanted to build more modular, interoperable components for the various company entities it had acquired through the years. I don’t think Covid was the impetus; I simply think that the writing was on the wall as tech development in the world of fixed income is changing.

Last month, the vendor announced the launch of the Ion FI EMS, a dealer-to-customer, fixed-income execution management system for both buy- and sell-side users. When compared to equities or FX, creating an EMS for fixed income is challenging. You need to provide access to a fragmented pool of liquidity (and that’s table stakes); you need a layer that provides smart order routing to a fragmented pool of liquidity; and then you need to build customized execution logic on top, as fixed income traders have vastly different needs and priorities. It’s that last piece that scares some OMS providers away when it comes to building a fixed income EMS—how do you slice orders and program the routing strategy; how do you build rules based on order characteristics; or, where is the best place to execute a trade.

I was speaking the other week with Tommaso di Grazia, head of fixed income product development at Ion. He said that this is what his team at Ion has been working on and the fruit of that labor is this new tool. And it’s that customization piece that has received the most attention, as that’s the differentiating piece, especially when it comes to RFQ workflows in an all-to-all trading environment. “That maximizes the chances of finding liquidity, and lowers the cost of a transaction, in a very fragmented world,” he told me.

But perhaps most important, when you have integrated systems and can automate more workflows, you can create more data, but that data will also appear in one, integrated place. As we like to bang on about here at WatersTechnology, having more data is great, but if you can’t provide context around that data, you are not being efficient and offering a special product. That’s what di Grazia said Ion is trying to achieve.

“It generates more data, which is something the EMS can use as an input—more data is better for pre-trade analytics,” he said. “As we’ve seen with the all-to-all [market], there’s a lot of data being generated, as opposed to traditional models. So the trend is that we’re seeing smaller-size trades [and] more frequent trades.”

He noted that Ion has “inherited” several pieces of technology over the years, but they are now “refactoring” those pieces to be interoperable. “We saw a benefit by exposing and integrating these with the Ion platform; that can be seen as an extra hook for executing.”

He also said that still today most workflows in the fixed-income RFQ space happen manually—with this all-to-all EMS, Ion wants to allow traders to break away from this 20^th century trading environment.

“There’s very little interoperability within systems when you have to do all these things. We saw that if this happens manually in a few places, why don’t we start thinking about how to glue things together and make sure that people can do what they do manually today in an automated fashion.”

A new day?

Now, I’ll note here that Ion has gotten vastly better with its PR strategy over the last year, or so. In the past, even for those aforementioned “negative” articles we wrote, they’d rarely comment, or would simply issue a spokesperson statement. Today, they make executives available to the media to discuss what they’re seeing. It’s my job to filter the BS PR speak and siphon out the important information for our subscribers. Like any worker, sometimes I do that job well, sometimes I fuck up.

I’m not here to say whether or not Ion’s FI EMS is going to be a game-changer, or if it’s even a good piece of technology. Fixed income traders will make that decision.

What I do think is interesting is this: Ion is publicly talking about interoperability and the need to deliver better analytics (read: context). It’s why Bloomberg is stitching together its Port and Aim platforms. It’s what LSEG will have to do with the many pieces it’s acquired over the last few years. It’s what SS&C is working toward with Advent, Eze, DST, and Algorithmics. It’s what Broadridge wants to do with Itiviti and other acquired platforms.

These are the biggest trading technology platform providers in the institutional, wholesale capital markets. They are doing this because gone are the days of the closed-off, monolithic systems (well, Bloomberg is an entity that defies that, but even that crocodile is evolving). Cloud, APIs, open-source tools, machine learning, cybersecurity and Big Tech companies are changing the pace of evolution in the financial technology space. While M&A will always be a necessity for growth, interoperability, and using interop to create analytics (context) is of paramount importance for vendors in this new world. Those that can’t evolve, will go extinct.

Again, think I’m off base, have missed something, am spot on, or just think I’m an idiot, fire away: anthony.malakian@infopro-digital.com.

The image accompanying this column is “Ruins of an Ancient City” by John Martin, courtesy of the Cleveland Museum of Art’s open-access program.