Not so long ago, the fixed income and derivatives markets were worlds apart. Banks had separate groups to deal with each. Under separate managers, these groups developed their own practices, cultures and computer systems.

But over the past few years, these worlds have collided. Bond traders now hedge their deals with swaps and swaptions, or even caps and floors. A number of securities now straddle the two worlds, such as callable, puttable and convertible bonds, and are widely traded. As fixed income and derivatives increasingly overlap, banks are merging the separate groups under a single manager. But they are finding it less easy to integrate the different computer systems.

The US investment banks, as usual, led the way in making the change. Major players such as JP Morgan, Merrill Lynch and Chemical (now part of Chase) pioneered the integration of fixed income and derivatives