Liquidnet expands into fixed income market
Global institutional trading network Liquidnet has announced that it will enter the fixed income market with its acquisition of bond trading platform Vega-Chi.
Vega-Chi’s trading platform will continue to operate separately from Liquidnet’s core equities business. The platform is currently available to all approved market participants who trade US and European high yield bonds as well as European convertible bonds.
Through a single platform, market participants are able to source liquidity in one place to execute their institutional, large-scale bond orders.
Liquidnet said that it will leverage its extensive network-which includes more than 740 asset managers and relationships with many exchanges and broker dealers around the globe-to create a critical mass of liquidity focused on the corporate bond market. In addition, Liquidnet and Vega-Chi expect to introduce the trading of US investment grade corporate bonds during 2014.
According to a recent research report issued by the TABB Group, there is high demand for a corporate bond market structure that allows diverse sources of liquidity to connect more easily. More than three-quarters of the buy side firms TABB spoke with said that now is the time for an alternative trading system to emerge to help provide greater transparency and support for the liquidity-strained corporate bond market.
Seth Merrin, Founder and CEO of Liquidnet, commetned: “There has been a massive increase in corporate bond issuance and at the same time a depletion of capital that dealers can use to facilitate trading. The result has been increasing difficulty among investment managers and dealers in accessing liquidity.
“To fix this liquidity drought over the long term, it’s important for market participants to come together and establish new systems and processes and an open platform that will facilitate the flow of liquidity within the corporate bond market more efficiently.”
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