Project Neptune; A Buy-Side Angle

With Lee Sanders, Head of Fixed Income and FX Dealing, AXA IM
There are a lot of new initiatives that have emerged in fixed income. The principle behind Project Neptune is to simplify these practices. It’s equally relevant to both the buy- and sell-side as both incur a lot of costs from accessing each other.
From the buy-side perspective: getting your order management system provider to connect to more than one third party platform at any one point is very challenging and might require a six-month lead time (at best). So imagine that an optimal execution framework identifies 30 initiatives; even if we think only ten of them are relevant, it would take a lot of intense work over a one or two-year period to integrate access to those ten platforms with your OMS. You’re incurring a huge amount of expense because you pay your OMS providers to do that work and additionally that invariably means that your own very limited IT resource is stretched even further.
While to some extent we feel that we will lose some of the competitive advantage that we currently have in our set up, initiatives like Project Neptune, which is intended to reduce costs by standardising connectivity between market participants, are of great value to us and the industry as a whole. I think that reflects the general principles of the FIX Trading Community as well as addressing some of the specific issues that are evolving in terms of market structure and liquidity in fixed income at the moment.
We support Project Neptune because the concept is platform neutral across OMS and EMS. By using a single standard protocol all market participants can talk to each other and the underlying principle is the platform’s agnostic nature. You can get to those platforms via an OMS, via an EMS, via a GUI, anyway you like, but it’s the language that connects it all up.
If you sit down and look at all these platforms, you have to be agnostic. This is at the core of what we are driving towards. To get a consensus view on where we put our attention. Neptune makes more sense than anything else as it is about trying to get as near to the mid-point of an execution as we can or better.