Overbond brings to credit trading A.I. Smart Order Routing and for the first-time Separate Bid and Ask Liquidity Scoring


Newly launched AI-driven smart order routing and bid-ask liquidity tiering tools developed by Overbond allow fixed income traders to optimize execution and fully automate more trades.

TORONTO and LONDON, Sept. 19, 2023 /PRNewswire/ – Following its bid-ask liquidity scoring model’s recent launch, Overbond launched its smart order routing (SOR) system today. These AI-driven tools are critical for achieving no-touch end-to-end bond trading automation and may contribute to the continuing increase in automated trading of fixed income.

Whether trading over the phone, by message or electronically, both buy-side and sell-side traders face the challenge of determining the liquidity of a bond before they trade. This knowledge is also crucial for determining which trades are suitable for auto-execution.

Buy-side traders must also choose where, how, and when to transact to ensure optimal execution. Traders need to know whether they can trade at their desired price for their desired size within their desired time. For large trades, achieving optimal execution may involve breaking the trade up into multiple smaller trades.

Overbond has developed AI-driven liquidity and price confidence analytics that auto-adapt to trade size and direction, enabling traders to see implied liquidity and confidence scores across hundreds of thousands of fixed income securities. The scores are derived from volatility and bid-ask spread components and are divided into tiers according to their liquidity and pricing confidence relative to the universe of bonds with the same currency. Overbond assigns bonds to three tiers. Tier 1 bonds, for example, are the most liquid and are the best candidates for auto-execution.

SOR is an automated process used by the buy-side for online trading. It executes trades by allocating them across various electronic trading venues and counterparties based on price and liquidity to get the best execution and minimise trading costs. When necessary, the SOR algorithm may first determine an optimal way to break up, or chunk, the trade.

Overbond worked with partners from the buy and sell sides to develop an SOR system with AI-enhanced routing logic that maximises execution probability and gives the trader complete visibility of how the order will be broken down.

“We’re very excited about the launch of these tools. At Overbond we have a strong team of data scientists and developers who are working hard to innovate and push the boundaries of what AI can do in the fixed income markets. Gauging liquidity and routing orders are pivotal steps in the trading process and enhancing them with AI can help traders manage their workflow more efficiently, automate more trades and improve profitability,” said Vuk Magdelinic, CEO of Overbond.

About Overbond

Overbond is a developer of process-redefining, AI-driven data and analytics and trade automation solutions for the global fixed income markets. Overbond performs market surveillance, data aggregation and normalization, and deep AI quantitative observation on more than 250,000 corporate bonds and fixed income ETFs. Applying proprietary artificial intelligence to pricing, curve visualization, market liquidity, issuance propensity, new issuance spreads, default risk and automated reporting, Overbond enables trade automation and enhances trade performance and portfolio returns. Clients of Toronto-based Overbond include global investment banks, broker-dealers, institutional investors, corporations and governments across the Americas, Europe and Asia. For more information, please visit www.overbond.com.

SOURCE Overbond Ltd.