Market intelligence & eTrading for Securitized Products

Need for Electronification of the MBS Market

2020 was an unprecedented year in mortgage markets with interest rates at/near all-time lows. This ultra low-rate environment led to a deluge of mortgage origination and issuance activity in 2020. Agency MBS issuance was up a staggering 108% YoY[1]. Furthermore, Total Trading Volumes and Average Daily Trading Volumes (ADV) of Specified Pools were both higher by nearly 50%[2] YoY in 2020. This increase in production and transaction volume has put a huge strain on existing trading workflows for the entire MBS ecosystem, exposing existing technology as increasingly archaic and unsustainable.

Impact on Originators

Mortgage Originators are some of the market participants facing the most strain on their traditional workflows. As production volumes have skyrocketed, so has their BWIC activity in specified pools. Not only are they dealing with more line items on lists, but also more frequent BWICs that are time consuming, onerous and error prone due to manual nature of existing transaction technology. Furthermore, lack of market penetration is dragging on optimization of Best Execution since the increased ADV has reduced dealer bandwidth. Bonds on BWICs often receive sub optimal bids or may be entirely missed impacting the originator’s ROI.

Impact on Dealers

The expansion in ADV has left dealers inundated with BWICs. Salespeople are left spending much of their time manually formatting and entering bids on lists received from various clients – each in their proprietary BWIC formats. Traders are unable to spend more than a few minutes pricing bonds, tracking client inventory for matchers, and liaising with customers on bids. All this leads to lower inventory churn for dealers that negatively impacts ROI, increases market risk, and increases human capital costs.

Impact on Buyside

The archaic market structure of the specified pool market has always been a burden to the buyside. There is no centralized source of market activity and standardization of data – leaving the buyside heavily dependent on external counterparties for actionable information. Despite increasing trading volumes in specified pools, buyside traders are often left on the side lines since they are inundated with BWIC and inventory spam from their counterparties. Filtering down information to find the right pools that match portfolio requirements is like searching for a needle in a haystack. Furthermore, the current BWIC trading process can take hours to complete and the feedback loop between buyers and sellers is inefficient. This can lead to unwarranted market risk as buyside participants wait on bid feedback and reduces their market participation.

Existing Trading Workflows are Unsustainable

BWIC management through manual spreadsheet data entry makes the trading process cumbersome and unsustainable as production and trading volumes continue to grow. The MBS marketplace is at an inflexion point where the adoption of eTrading to support seamless communication & scalable workflows as well as smarter data driven decisions, will become a differentiating factor for market participants. As the market continues to become more electronic, having a digital platform when data is exchanged in a standardized format will help all market participants and open the door to technologies such as auto-bidding. BondXN allows MBS market participants to step into the future by integrating our technology with minimum disruptions.

The BondXN Solution

Aggregated BWIC Calendar & Live Alerts

BondXN processes multiple communication methods to prepare the most accurate daily BWIC calendar ensuring clients never miss out on market activity. View the real-time and historical BWIC calendar aggregated across counterparties. Live alerts help clients track the status of bids and watchlist matchers.

Flexible Distribution & Multiple Dealer Choices

Choose to deliver bid lists to multiple dealers on the platform with flexibility to also send standardized communication via email. In-app redistribution enables dealers to re-publish BWICs to investors and achieve maximum market penetration. Dealers in the BondXN network have been able to increase bidding on BWICs by 65%.

Aggregated Multi-Dealer Inventory

View real time aggregated inventory across dealers. Combining this feature with BondXN’s proprietary Search tool enables clients to find bonds that best match their needs.

Bond Search & Watchlists

Filter for bonds based on multiple product specific criteria to sift through the noise and find matching dealer inventory and/or bonds on BWICs. Set up watchlists and get related alerts on market matchers.

Live Feedback Loop & On-Platform Chats

BondXN enables clients to give and receive feedback on bids as well as communicate with counterparties directly on the platform. Access our secure and confidential audit trail of levels and communication to ensure compliance.

Consolidated Color & Price Talk

BondXN enables clients to publish and view historical covers and price talk across counterparties for more efficient price discovery.

Data Mining & Analytics

BondXN consolidates fragmented data to help clients identify actionable information and insights to make better market decisions. Access regular analytics on counterparty participation, coverage, peer ranking, trade cost and more.