VAN DE GEER The role of technology in improving liquidity is in how it can attract a broader set of customers. One of the reasons we have such a deep, liquid bond-futures market in Australia is because there is a broad range of customers.

The bond-futures market is comprised of many buy- and sell-side investors, but a greater proportion is professional proprietary-trading firms. These are large, sophisticated and well-capitalised companies using technology to carry out different strategies in the futures market. They make up around 35 per cent of activity we see in futures and are adding significantly to bid-offer liquidity in orderbooks.

VAN DE GEER In my view there is a clear focus on using sophisticated technology to see how what happens in one market triggers behaviour in another. This is causing some traders to be active in disparate products because it is what their algorithmic system is pointing to.

TURNER In my mind the fixed-income market is about 10-15 years behind FX markets. Digitisation has occurred in fixed income, but we are way behind in automation – such as that we have seen in FX markets. For this reason I think automation is next for fixed income.

One thing we have been thinking about is whether in five years’ time bond traders will still be manually pricing and hedging bond flows or whether this will occur via an electronic system. I expect a place to continue to exist for human trading, but if it’s between the nuts and bolts of executing trades or a move into automation I think the latter is the direction we’re more likely to go.

CHEN I completely agree with Luke Turner’s comments. Technology has meant that liquidity is greater for small parcel sizes. Bid-offer spreads have come in as brokers have had to tighten their bid-offers to support flow. However, if we’re trying to work a larger parcel nothing has really changed. We still need to work with a broker to achieve best execution.