© monsitj The best quoted price is not an indicator of best execution. At the Fixed Income Leaders Summit (FILS), buy-side leaders, trading platforms and liquidity providers agreed that there are five implicit factors along with clean data, the right technology and human judgement that make a definitive difference for Best Execution.
A Deeper Assessment of Execution Quality
Lionel Goepfert
Fixed Income Institutional Sales
Five key factors a price quote will not show
“Execution quality goes beyond the quoted price. A headline price ignores several factors.”
— Lionel Goepfert, Fixed Income Institutional Sales, at CACEIS Market Solutions
- Execution probability: will the trade be filled?
- Market impact: how far does the trade move the market?
- Information leakage: who learns about the intention to trade?
- Opportunity cost: what is lost by waiting or missing the trade?
- Workflow efficiency: how much time and effort does the trade require?
Analytics that separate signals from noise
Pre-trade and post-trade analytics help desks identify the most reliable liquidity sources. They also help distinguish actionable liquidity indications from less reliable market signals. Over time, they allow teams to refine counterparty selection and execution strategies.
Visible Liquidity is Not Resilient Liquidity
Fragmentation expands choice
Electronic platforms and non-bank liquidity providers have widened the range of execution channels. Concurrently, ETFs and portfolio trading impact liquidity dynamics and price formation.
Stress liquidity differs from normal market liquidity
“Greater visibility does not guarantee greater liquidity. Liquidity available in calm markets can disappear when volatility rises or balance-sheet constraints tighten.”
— Lionel Goepfert, Fixed Income Institutional Sales, at CACEIS Market Solutions
Desks must therefore understand the specific constraints of each liquidity provider and dynamically adapt their strategy to shifting market conditions.
The Right Protocol Depends on the Trade
Match the protocol to the trade
RFQ, streaming, portfolio trading, voice execution and hybrid approaches each have a distinct role. The best choice depends on trade size, liquidity, market conditions and the risk of information leakage.
Automation should complement judgement
Automation now goes beyond basic workflow efficiency. It actively supports rules-based protocol selection, counterparty selection and trade preparation.
“Automation should complement human judgement, particularly for less liquid bonds and volatile markets.”
— Lionel Goepfert, Fixed Income Institutional Sales, at CACEIS Market Solutions
AI Performance Depends on Data Quality
How AI can optimize the trading lifecycle
Potential applications cover the whole trading lifecycle: security selection, pre-trade liquidity assessment, counterparty selection, execution support and post-trade analysis. Machine learning can identify patterns in historical execution data and estimate the probability of finding liquidity.
Five challenges blocking progress
To fully realise the benefits of AI, the industry must overcome five persistent hurdles
- Data quality and fragmented information sources
- Reliability and relevance of liquidity indicators
- Data confidentiality and information security
- Governance, accountability and human oversight
- Measurable benefits beyond theoretical efficiency gains
“AI is only as good as the data behind it. Poor-quality data undermines even the most sophisticated tools.”
— Lionel Goepfert, Fixed Income Institutional Sales, at CACEIS Market Solutions
Best Execution is a Team Effort
Traders contribute earlier
Traders have a deep, real-time understanding of market conditions, liquidity and execution constraints. Increasingly, they help portfolio managers shape implementation earlier in the investment process.
Technology enables collaboration
Integrated systems, efficient Order Management System workflows, relevant dashboards and streamlined communication tools seamlessly connect portfolio managers, traders and technology teams. Clear communication of priorities and expectations remains essential.
What Comes Next: 24/7 Trading and Tokenisation
Access is not continuity
Extending trading hours to offer round-the-clock access to electronic liquidity is fundamentally different from establishing a genuinely continuous liquid trading environment.
Infrastructure sets the pace
Funding, collateral mobility, settlement and post-trade infrastructure represent the first significant operational challenges. Meanwhile, tokenisation and digital bond issuance are worth monitoring, though their adoption timeline will ultimately follow client demand and infrastructure maturity.
What this means for clients
Fixed income execution is becoming increasingly electronic, data-driven and technology-enabled. Yet access to diverse liquidity, human expertise and strong client relationships remain the baseline for success.
At CACEIS, the Fixed Income desk helps clients turn these insights into better execution, providing wider access to liquidity and sophisticated tools that support sound decisions.
Turn your insights into better execution
Contact CACEIS’ Fixed Income Desk
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Lionel Goepfert Fixed Income Institutional Sales lionel.goepfert@caceis.com |
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Fehri Khadri Head of Execution & Clearing Sales Fehri.Khadri@caceis.com |
