Tag Archives: Liquidnet

Fixed Income, Tech Talk

LiquidNet: Make Corporate Bond Trading More Liquid [For Buyside Only]

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Many fixed income folks are lamenting about liquidity in the corporate bond market. LiquidNet, the institutional trading platform is determined to make corporate bond trading more liquid..for the buyside.

Just when you thought e-bond trading for corporate bonds was a never ending pipe dream…

Liquidnet Launches Fixed Income Dark Pool to Centralize Institutional Trading of Corporate Bonds

More than 120 asset managers across the US and Europe on-board for launch

Enrolled asset managers comprise two-thirds of top 50 holders of US corporate bond assets under management

September 29, 2015 08:00 AM Eastern Daylight Time

NEW YORK–(BUSINESS WIRE)–Liquidnet, the global institutional trading network, today announced the launch of their Fixed Income dark pool that facilitates direct, peer-to-peer trading of corporate bonds among asset managers in the US, Canada and Europe, creating a much-needed hub of institutional liquidity. Liquidnet has enrolled more than 120 asset managers, representing a critical mass of liquidity and a sizeable portion of assets under management for high yield and investment grade bonds in the US. At launch, the platform will enable trading for US and European corporate bonds (high yield and investment grade), emerging market corporate bonds, and European convertible bonds.

“Greenwich Associates research found that 80% of investors find it extremely difficult to execute large block trades; as such, a platform that can help ease that burden while not causing a shift in the trader’s workflow is a necessary part of the path forward.”

The Fixed Income dark pool has been designed to provide a seamless solution for corporate bond traders, providing them a protected venue in which to trade natural liquidity safely and efficiently. The platform has been built with input from Liquidnet’s network of leading asset managers and bolstered by the firm’s experience operating the leading dark pool for the institutional trading of equities. Similar to Liquidnet’s equities solution, the Fixed Income dark pool will provide the option for those corporate bond traders utilizing an order management system (OMS) to easily have their orders swept into the pool with minimal changes to existing workflow.

“The fixed income market has been woefully underserved by technology and, as concerns about a liquidity crunch continue to rise, it needs a transformation,” said Seth Merrin, founder and CEO of Liquidnet. “With close to 15 years of experience connecting asset managers around the world to solve the unique challenges of institutional equities trading, Liquidnet is uniquely positioned to provide a more efficient trading solution and experience that delivers a critical mass of natural liquidity that minimizes information leakage and maximizes best execution.”

Liquidnet has leveraged its relationships with partners and existing buy-side Member firms to ensure the platform’s success at launch. In June, the firm announced successful integrations with seven OMS operators that support direct connectivity, and a partnership with Interactive Data for continuous evaluated pricing to aid in pre-trade transparency and more efficient best execution analysis. In addition to new features, Liquidnet has also expanded its Fixed Income team and expertise with the recent high-profile appointment of Chris Dennis, formerly of BlackRock, as head of US Fixed Income Sales.

“The corporate bond market is desperate for innovation and improved efficiencies, and we’re starting to see several new trading platforms emerge,” said Kevin McPartland, Head of Research for Market Structure and Technology at Greenwich Associates. “Greenwich Associates research found that 80% of investors find it extremely difficult to execute large block trades; as such, a platform that can help ease that burden while not causing a shift in the trader’s workflow is a necessary part of the path forward.”

“Liquidnet Fixed Income was designed with significant input from the buy side to create the first true dark pool for corporate bonds,” said Constantinos Antoniades, Liquidnet’s Head of Fixed Income. “By facilitating a high-quality critical mass of participants, including two-thirds of the top 50 holders of US corporate bonds, Liquidnet will provide the most convenient, secure trading venue for institutional fixed income trading going forward.”

A recent survey of buy-side firms—comprising $12.15 trillion in assets under management—conducted by fixed income magazine, The Desk, stated that 58 percent of buy-side respondents indicated that they were planning to move to Liquidnet for their fixed income trading.1

Fixed Income, Tech Talk

Electronifying The Corporate Bond Market Chapter 15: Liquidnet Tosses Hat Into the Ring

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MarketsMuse editors are almost starting to lose count when it comes to the number of electronic trading initiatives from FinTech aficionados who purportedly intend to make the institutional corporate bond market more transparent, and hence more liquid..

Thanks to Liquidnet, the latest player to plug into the corporate bond market movement and throw their hat into the ring, there are now 15 (give or take) initiatives. We can only opine that those who believe that fragmenting marketplaces [particularly products that were never even centralized to start with] as a means to creating a competitive, transparent and hence liquid trading marketplace for institutional investors is at very best, counterintuitive. Some market structure experts might even go so far as to say this electronic bond free-for-all for market share is “completely assbackwards.”

Per coverage by Pensions & Investments Magazine, institutional trading network Liquidnet is set to launch an institutional dark pool for corporate bonds, in the third quarter this year. Best known as a dark pool provider for institutional equities trading, Liquidnet is integrating seven order management systems, which execute securities orders, to provide the connectivity and access to trading opportunities that are not currently available in the corporate bonds market. Liquidnet said in a news release Thursday the development will centralize “a critical mass” of corporate bond liquidity to market participants.

liquidnet“By connecting to (clients’) existing order management systems, asset managers will have direct access to a protected venue that allows them to exchange natural liquidity with minimum effort and minimum information leakage,” said Constantinos Antoniades, head of Liquidnet fixed income, in the news release. “The functionality, protocols and connectivity of our dark pool will create significant new liquidity in the broader corporate bond universe — not just in the most liquid segment of the market.”

Upon reading the press release via Pensions & Investments Magazine, one electronic market veteran had this to say, “The long-held thesis that a centralized marketplace, where all orders are routed and displayed in centralized limit order books (CLOBS) is the best foundation to attracting liquidity and by definition, also provides true best execution for legacy OTC products is a notion that seems to have gone with the wind.” Added that Opinionator (who chooses to remain anonymous given his current Industry role), “It’s only mildly surprising that the regulators (i.e. SEC) have no clue as to the impact of their enabling an industry-wide gambit that will turn the corporate bond market into an electronic rats nest. Despite a 5-fold increase in outstanding issuance during the past several years,  Dodd-Frank regulation has caused banks to step away from traditional market-making and risk taking, and consequently, the corporate bond market is only becoming increasingly more illiquid. More electronic platforms approved by regulators will simply make the corporate bond market even more fragmented and even less competitive.”

ETF News, Tech Talk

Technology Company Seeks to Shake Up the Way Corporate Bonds Trade

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Below extract courtesy of Wall Street Journal, as reported by Katy Burne 

Institutional equities-trading platform Liquidnet is preparing to launch a credit-trading network in the fall, following regulatory approval last week of its acquisition of high-yield bond platform Vega-Chi.

The initiative is the latest example of a technology company seeking to shake up the way corporate bonds trade, amid a challenging fixed-income trading environment and an increasing willingness by debt investors that traditionally use the telephone to buy and sell on electronic systems.

Liquidnet is privately held, with a majority interest owned by founder and Chief Executive Seth Merrin. Its purchase of Vega-Chi, announced in March, is scheduled to close Friday following approval of the deal in late July from the Financial Industry Regulatory Authority. Continue reading →