The rates markets – from U.S. Treasury bonds and European government bonds to interest rate swaps, derivatives, and futures – are undergoing the same kind of electronic transformation equities experienced a decade ago. There has been a decisive shift from manual, legacy systems toward fully electronic execution.
As Liyan Yu, Global Head of Rates Electronic Trading at JP Morgan, put it to The Desk earlier this year: “We have seen growth in the electronification of clients’ execution. The volume going through third-party electronic platforms has increased by 50% from 2021 to 2024, and the ticket count has increased even more. This means the clients are electronifying the execution of smaller tickets as they try to be more efficient.”
As trading volumes scale, risk management grows more complex, and client expectations rise, old infrastructure begins to show its age. Legacy platforms crack under today’s demands, with latency emerging as the most punishing symptom – slowing execution in markets that leave no room for delay. Migrating away from them can be challenging, but the alternative is worse: operational bottlenecks, costly outages, and an inability to hedge risk in real time and compete in markets where speed and automation are the baseline. For market participants, modernization isn’t just a nice-to-have – it’s table stakes for the future of rates trading.
The Modernization Imperative in Rates
Rates trading modernization isn’t about fixing a single weakness. It’s about confronting a broad set of issues – from data management and execution to latency and scale – all of which compound under today’s market pressures.
Data overload – Rates markets generate immense, fragmented data streams. Without intelligent filtering, firms trading interest rates drown in irrelevant updates, creating latency drag and wasted compute.
Connectivity gaps – Linking client flow to multiple venues with specific risk controls is difficult on rigid, decades-old platforms, leaving firms to navigate costly workarounds.
Latency risk – In rates products, microseconds decide outcomes. Legacy middleware slows response times, leaving firms behind in the market.
Migration drag – Moving off entrenched platforms means untangling decades of workflows and data – a necessary step in the long run, but rife with short-term pain points.
Scaling stress – Surging volumes in Treasurys, swaps, and futures expose systems that can’t maintain performance amid volatility or under peak loads.
Together, these pressures make clear that rates trading needs infrastructure built for today’s demands. That’s where Pico Redline comes in.
Pico Redline: A Better Approach to Rates Infrastructure
Originally engineered for ultra-low latency in equities and futures, Pico Redline has now been expanded to meet the unique demands of rates and fixed income markets. At its core, Redline combines three differentiating capabilities:
Feed handler technology – Ingests vast market data streams and filters by symbol or criteria, ensuring clients see only what matters – at microsecond speeds.
Execution gateway – Bridges client order flow to multiple exchanges with embedded risk controls, enabling banks to extend secure access with confidence.
Unified API – A single integration point spanning asset classes, reducing operational overhead and accelerating time to market.
Combined, our feed handler and execution gateway functionality deliver more than speed. It gives institutions a consistent, resilient foundation they can scale across markets – from Treasurys, swaps, and interest rate derivatives to equities – without fragmenting their infrastructure.
For many global banks, adopting Redline has meant confronting decades of technical debt. Migrating from entrenched legacy systems is never simple: workflows are deeply embedded, while data reconciliation is a heavy lift. But firms making the move see the payoff in three crucial ways: sharper execution, greater resilience, and the ability to handle surging electronic volumes and pursue trading strategies without compromise. Combined with Corvil Analytics for precise latency measurement, firms gain not only the tools but also the transparency to optimize performance continuously.
What’s notable is how quickly rates has emerged as one of Redline’s strongest areas of adoption. Client demand – accelerated by the slow pace of evolution at incumbent providers – has made modernization not just a strategic choice but a competitive necessity. Redline is helping institutions make that leap, combining industry-leading performance with practical support for one of the most complex transitions in global finance.
The Path Forward
The modernization of rates trading is no longer on the horizon – it’s happening now. Institutions that continue to rely on aging systems risk falling behind in markets where speed, resiliency, and scalability define competitiveness. Pico Redline’s feed handler and execution gateway functionality offer a way forward: proven low-latency infrastructure, built to handle the realities of modern rates markets and adaptable enough to scale across asset classes. For firms navigating this transition, the choice is clear – the future belongs to those who invest in infrastructure designed for it. For more info, speak to a Pico expert today.