ML Develops Award-Winning Bond Price Tool

Published: November 2003

An innovative bond price information tool initially developed by an ML eCommerce product manager has won Euromoney's Best New Development Award for 2003.

Euromoney described the tool, an Outlook-based price information product called CLOVIS, as "easily the most interesting new system that Euromoney has seen this year." The magazine also praised CLOVIS for its "simplicity."

CLOVIS allows bond traders to send clients individually tailored bond price lists with the ease of sending an e-mail. It automatically creates new folders in the clients' Outlook inboxes. The incoming documents look like a normal e-mail except that the "to," "from" and "subject" fields are replaced with fields such as "issuer," "maturity" and "bid price." Clients have the flexibility to adjust the information fields according to their own preferences. As updates are sent through, prices are automatically adjusted.

CLOVIS was developed by Steelhead Systems, a venture capital firm 40%-owned by ML. It was the brainchild of Stuart Taylor, head of development in the EMEA Debt eCommerce team.

"Merrill Lynch and other dealers had been approached by a number of large clients in European Fixed Income to automate feeds of bond lists directly to their internal systems," Taylor explained. "The clients wanted to co-mingle bond prices from various dealers to establish best price. However building point-to-point technology connections with individual clients is expensive for both dealers and clients."

Taylor struck upon the idea of enhancing regular e-mail to allow structured data, such as prices, to be passed securely. Common use of email meant little training would be required. Another advantage was that the new system effectively re-introduced the point-to-point dealer-client bilateral relationship that had been disintermediated with the onset of multi-dealer trading hubs.

There are already approximately 10 top-tier buy-side clients using the system to receive bond price emails.

Taylor points out that the CLOVIS system is an attractive solution to other dealers and clients because the system naturally co-mingles data from many sources. Other business areas within ML can also leverage the product. "This system allows you to send any data that would normally work in an Excel list over e-mail. Except with CLOVIS, information is automatically updated so you don't have to ask the client to discard old spreadsheets.

"Any multi-user application from front to back office with lists such as pricing, product offerings, orders, trade confirmations, and even project plans could be managed cost effectively over the system," he said.

Stefano Blotto, head of EMEA Debt eCommerce and Wholesaling, added: "When Stuart came up with this innovative solution, we carefully considered whether to develop it in-house and market it uniquely to the Merrill Lynch client base or open it up to other dealers as an industry-wide solution.

"We concluded that the second option was preferable as we could spread development costs, enhance the value of the invention to our clients by creating an industry standard, and, ultimately, introduce it to other industries. The JV venture capital firm Episode-1, with its strong track record in technology start-ups, has provided ML with the ability to cheaply connect to our clients and potentially monetise the value of CLOVIS through our equity investment in Steelhead Systems."

ML received the award at the Euromoney Technology Awards 2003 ceremony in London on 6 November. ML was also highly commended in the category "Best Electronic Services for Debt Issuers."