Bloomberg to launch new set of tradable trackers based on own indices

Tradeable Trackers, the new indices set to launch in Q4, are expected to deepen liquidity and improve intraday price transparency.

Bloomberg has announced the imminent launch of Tradeable Trackers, a new set of tradeable indices based on its own fixed income indices.

The new rules-based indices differ from traditional end-of-day ones in that they have intraday pricing available, which reduces tracking errors while also enhancing transparency and price discovery.

Through the creation of standardised and listed products, the Tradeable Trackers will encourage innovation in the fixed income derivatives market.

In addition, the new indices will expand Bloomberg’s existing fixed income and derivatives offerings and offer clients the ability to gain exposure to these markets easily.

Between 2017 and 2021, outstanding US corporate bond debt grew 26.3% according to research from SIFMA and according to a report from FINRA, average daily volume (ADV) in the secondary markets only grew 12.7% in the same period. Bloomberg’s new indices will give market participants the ability to hedge their portfolios with capital efficiency while also deepening the liquidity in the secondary fixed income markets.

“As the fixed income markets evolve, we expect a number of liquid offerings to be made available to investors,” said Steve Berkley, CEO of Bloomberg Index Services.

“The Tradable Trackers take this concept one step further by providing both liquidity and a targeted market performance as measured by the Bloomberg Indices, the most widely used fixed income indices in the world.”

Due to be available in the fourth quarter of this year, the first Tradable Tracker index will include 200 liquid bonds and will monitor the performance of the Bloomberg US Corporate Bond Index as well as related spreads.

Bloomberg’s evaluated pricing service, BVAL, will provide pricing using BVAL’s intraday pricing product IBVAL. The firm claims this will enable greater liquidity in products based on the Tradable Trackers with higher correlation to these benchmark indices. Users of Bloomberg Terminal will be able to identify trading opportunities using Bloomberg’s Index Relative Value analytics (IRV).

Tradeable Trackers and Bloomberg’s electronic trading solutions will be available to be used in conjunction, allowing market participants to improve the accuracy and quality of their risk management.

The impending launch of Tradable Trackers follows Bloomberg’s launch of Bloomberg Bridge, a new all-to-all intermediated trading service for emerging markets and corporate bonds. Backed by Goldman Sachs intermediation desks, the service allows clients to launch or respond to request-for-quotes.