Barclays, FactSet unveil tool to bolster transparency in the bond market

Barclays, FactSet unveil tool to bolster transparency in the bond market
Written by:
Damian Wood
16th January, 10:38
  • London-headquartered multi-national bank, Barclays Plc and data service provider, FactSet, have agreed to collaborate to foster transparency on the opaque bond market.
  • The firms have come up with an application that analyses sets of financial markets data to evaluate the liquidity of thousands of bonds.
  • The tool referred to as Liquidity Cost Scores (LCS), will deal with one the bond markets’ chronic problems, liquidity.

London-headquartered multi-national bank, Barclays Plc and data service provider FactSet have agreed to collaborate to foster transparency on the “opaque” bond market.

Barclays is one of the oldest financial institutions globally, having existed for more than 325 years. Chief Executive Jes Staley currently steers the bank, and it said on Wednesday that it would release to the market a tool that analyses the liquidity status of more than 22,000 bonds available to FactSet subscribers. The bank plans to partly leverage on some of its internal data on more than $50 trillion of fixed-income securities.

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 Data is becoming the next frontier for banks, given their central position in the global financial markets. With access to tons of transactions relating to insurers, hedge funds, pension funds, and asset managers, financial institutions are now inventing new ways of making use of such information.

The Wall Street banks such as Goldman Sachs and JP Morgan Chase have engaged data experts to harvest large amounts of information to help them draw key insights regarding various financial forecasts and instruments.

Global head of content and technology solutions at FactSet, Rich Newman commented: “New data and technology are driving change across the investment industry at an unprecedented pace, and we increasingly see this impact fixed income.”

The new tool by Barclays, dubbed ‘Liquidity Cost Scores (LCS)’, is a computer programming algorithm capable of compiling and analysing two-way prices as set by traders against hundreds of securities in the UK, US, and other emerging global markets.

The tool will express the cost of an immediate, institutional-size, round-trip transaction as a percentage of the bond price.

“Asset managers tend to prefer liquidity analytics that are intuitive. LCS is based off actual two-way quotes from our trading desks. Its calculation does not involve complex mathematical models,” Amy Mignosi from Barclays Live sales team told The Wall Street Journal during an interview.

Back in the early 2,000s, Barclays was one of the renowned developers of tech-focused currency systems, alongside Deutsche Bank AG.

Today, the bank is solving a chronic problem in the bond markets – liquidity – if recent reports are anything to go by, all thanks to data it has collected for more than three centuries.

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