TradingScreen/NYSE bond promotion aims to entice buy-side
TradingScreen and NYSE Euronext are sweetening the deal on
their on-exchange corporate bond trading offering by giving free access to the
For the first three months, NYSE Euronext will finance the software
licences for qualifying institutional investors to view the European Central
Order Book (ECOB), which displays liquidity on NYSE BondMatch and
TradingScreen’s soon-to-be-launched fixed income multilateral trading facility
The intention is to entice buy-siders by letting them view liquidity on NYSE BondMatch and Galaxy order books even before they decide to connect.
“This new European trading platform not only offers compulsory
clearing and settlement solutions, it also improves transparency and liquidity
by being open to all, whether on the buy side or on the sell side,” said Nathalie
Masset, director, European debt markets, NYSE Euronext. “When we launched NYSE
BondMatch in July 2011, we pointed out that it would take at least two years to
assess how the market would respond to this initiative, because it means changing
trading behaviours. By improving the transparency of bond prices, the platform
will ultimately raise market liquidity. Once transparency in trade prices has
reached a certain level, the market tends to become more liquid.”
If institutional investors decide to trade on the ECOB,
their screens will simply be reconfigured from ‘view’ to ‘trading’ mode and
licensing costs will shift to the investor’s market-member intermediaries.
The ECOB virtually consolidates order books of bond markets
meeting the so-called Cassiopeia criteria. The Cassiopeia criteria was
developed in 2010 by the French economic ministry’s committee for developing more European secondary bond platforms.
The Galaxy MTF will accept only firm orders
and aggregates them in a global order book with prices accessible to all
participants. Post-trade information and transaction records are made available
NYSE BondMatch is a new MTF that lets qualified debt market
participants trade euro-denominated corporate, financial and covered bonds on a
transparent order book with firm orders. BondMatch aims to provide liquidity
and transparency through an order book with firm orders, pre- and post-trade
reporting and clearing and settlement solutions.
“NYSE BondMatch was defined by its participants – asset
managers, insurance companies, banks, brokers – and based on the observed
failures of the existing OTC model,” said Masset. “Given the new [MiFID II] regulation,
banks can no longer play their market-making role like they used to do. We must
move to a model where institutional investors have a much greater role to play.”
Masset said in addition to the new partnership with
TradingScreen, NYSE BondMatch has also introduced an ‘intermediation’ status
for buy-side participants that preferred to send their trading flow through an
existing NYSE BondMatch member. This status was created just before NYSE
BondMatch was launched, at the request of institutional investors.
The venue operator is also in the middle of a capacity
program upgrade for its core equities and bonds trading systems. Equities, exchange-traded funds and bonds listed on NYSE Euronext regulated
cash markets will be moved to upgraded infrastructure on 6 August.