Transition management: Look both ways before crossing fixed income
Chris Adolph, Director, Customised Portfolio Solutions and Brandon Rasmussen, Head of Fixed Income Trading at Russell Investments, explains how independent transition management adds transparency and accountability to an otherwise opaque market.
Fund Operator Editor POSTED ON 7/19/2023 8:00:00 AM
This article was produced by Russell Investments as part of their valued Industry Partnership to Fund Operator.
With the potentially high costs of trading some fixed income securities, it is not surprising that crossing would be an attractive proposition.
This can, however, be something of a cautionary tale in fixed income markets, where centralised pricing exchanges and crossing networks do not exist. The impact of this is that there is no single observable price or consolidated quote.
Transparency into liquidity and price is therefore not readily available, so the challenge is in determining the price at which you cross. A transition manager who can independently source potential crossing counterparties at arm’s length – and who can add transparency and competitiveness to the price-setting process by, for example, creating an auction environment for each trade – can have a material impact in reducing overall costs during a restructuring.
Key highlights include:
- Why hire a fixed income transition manager?
- Are fixed income transitions unique?
- Do transition managers add value in fixed income events?
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