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Mediobanca puts on speed through introduction of Bloomberg’s DOR

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Italian investment bank Mediobanca recently became the first client to implement Bloomberg’s Direct Order Routing (DOR) solution for ETFs, enabling it to automate their trading process.

Italian investment bank Mediobanca recently became the first client to implement Bloomberg’s Direct Order Routing (DOR) solution for ETFs, enabling it to automate their trading process.

Vito Antonio Pinto, Director at Mediobanca, explains that the bank also uses Bloomberg’s RFQe solution to trade ETFs, and to access best-in-class liquidity for both liquid and illiquid ETFs.

Pinto says: “We used to manage all our orders with greater latency, quoting bid/offer prices to our clients via chat or on a trading platform, although the process was not as smooth as it is now.”

Pinto says that the DOR technology has given Mediobanca the opportunity to automate all ETF execution processes, starting from when they receive an RFQ or order from the client. 

“It reduces the time it takes and makes it much more efficient, so we can produce a bid/offer in a few seconds, whereas before, we took around 20 seconds to provide a competitive offer to the client,” Pinto says.

On top of that, now, Mediobanca can also update the price they show to the client. “ETFs are very volatile and the price can move a lot in a few seconds,” Pinto says. “Before DOR we needed to be very wide in the price in order to reduce the risk of an adverse movement in the ETF. Now we are able to be more competitive than before, and in competition with other players as we have better prices.”

Mediobanca is an important client on Bloomberg’s RFQe trading solution, and one that is open to being pioneers in the adoption of new technology. They are also on the Borsa Italiana platform and were the top market maker in terms of numbers of contracts, and second in terms of turnover against 11 market makers on the Borsa Italiana platform. 

During the first quarter of this year, the bank executed notional volume equal to EUR8.7 billion, and year to date EUR10.5 billion with EUR1.2 billion year to date on the Borsa in RFQ mode, when the bank acts as a prop desk. The bank is also a brokerage house.

“They supported us very well in the development of the new technology and it has been a useful tool to hedge our positions,” Pinto says.

Ravi Sawhney, Head of Trading Automation & Analytics at Bloomberg, explains that his team provides automation to the buy side across different asset classes, and has most recently built out the ETF offering, with DOR.

“One of our ambitions is to provide efficiency gains for our customers,” Sawhney says. “Where the trading desk are performing certain tasks manually, DOR gives them the option to automate those functions.”

DOR is used by real money clients including hedge funds and wealth management firms to automate trading on Bloomberg for fixed income, credit default swaps, interest rate swaps FX and now ETFs. 

The product enables the client to drive the trade execution process programmatically. The API offering is designed to provide the full capabilities an execution trader would have on the Bloomberg Terminal. “It was fantastic to see Mediobanca not only achieve operational efficiency on their side, but also be able to transfer that to better pricing for their own clients,” Sawhney says.

“We have been building out the products across Equities, Fixed Income and FX to meet the growing needs of the customers.”

Pinto explains that his bank’s trading desk is quite young, just five years old. “We started by managing the trading activities for our buy side companies within our group. This helped build the foundations of our business. Later on, we  attracted non-captive clients such as managed accounts, insurance companies, family offices, asset managers and private banks based both in Europe and the US.” 

DOR is one way to automate trade execution on Bloomberg. Sawhney explains that an alternative offering is Rule Builder. 

“Rule Builder offers customers who are integrated into one of the execution management systems, such as EMSX, a low-code method to deploy automation quickly,” he explains. “Clients who are not looking to integrate directly into their in-house system can instead, write automation rules within the Bloomberg Terminal, and direct those trades to our venues for execution.”
Bloomberg is looking to enhance Rule Builder for trading on RFQe later this year.

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