Exchanges press ahead with fixed income initiatives

Exchange groups NYSE Euronext and Nasdaq OMX have both announced details of new trading platforms designed to facilitate order-driven bond trading in Europe.
By None

Exchange groups NYSE Euronext and Nasdaq OMX have both announced details of new trading platforms designed to facilitate order-driven bond trading in Europe.

NYSE Euronext has received approval from French regulator Autorité des Marchés Financiers to launch NYSE BondMatch, its European multilateral trading facility (MTF) for euro-denominated bonds, on 11 July.

Upon launch, NYSE BondMatch will offer trading in 1,800 international corporate, financial and covered bonds on a transparent order book. According to NYSE, the launch of BondMatch will improve transparency and liquidity by offering access to both buy- and sell-side participants. Central clearing will be provided by LCH.Clearnet S.A. and the MTF will be connected to European and international central securities depositories for settlement and delivery.

“The financial crisis highlighted the urgent need for a more liquid, transparent, secure and automated bond market,” said Fabrizio Capanna, head of retail credit trading, Europe (ex-UK), BNP Paribas Corporate and Investment Banking. “We are confident that NYSE BondMatch will boost liquidity, reduce risk and encourage greater participation by reducing dealing costs and making the market more transparent.”

NYSE BondMatch has also expanded its strategic committee with the appointment of François de Causans, head of funding at Total, Dominic Holland, director, credit e-Commerce at Deutsche Bank, Thijs Aaten, head of allocation at Dutch asset manager APG Investments, and Olivier Gazzolo, co-head of European credit trading at Société Générale Corporate and Investment Banking.

“The success of NYSE BondMatch will depend on the will of all participants to drive the market from the offset, including banks and brokers who will benefit from opportunities to increase trading volumes with lower risk,” said Christophe Roupie, global head of trading and securities financing at AXA Investment Managers and deputy chairman of NYSE BondMatch’s strategic committee.

NYSE BondMatch was launched in direct response to the specifications for fixed income trading developed by the Cassiopeia Committee, a French initiative that ran from April to November 2010, which sought to improve transparency, liquidity, post-trade services and reporting in the fixed income market. Trading technology vendor TradingScreen is also due to launch Galaxy, an MTF for euro-denominated bonds, built according to the Cassiopeia guidelines.

Vega-Chi, an alternative bond trading platform set up by former Goldman Sachs banker Constantinos Antoniades, began offering convertible bond trading in February 2010. Vega-Chi is expected to introduce a European high-yield bond trading platform in the coming weeks. In February 2010, the London Stock Exchange launched an electronic retail bond trading platform, initially offering 49 gilts and ten corporate bonds. The platform is supported by three market makers and offers continuous two-way pricing, enabling investors to view prices on-screen.

The London Stock Exchange is also planning to launch MTS Credit, another bond market also based on the Cassiopeia Committee's proposals. MTS Credit is due to launch before the end of this year and will offer trading in over 2,400 investment grade, euro-denominated corporate, financial and covered bonds. Participants will access the market via MTS's existing BondVision technology.

INET extension

Meanwhile, Nasdaq OMX has migrated bond trading in five of the Nordic and Baltic markets to ultra-fast Genium INET trading system.

The new technology platform enables the 5,000 retail and institutional bonds offered in Denmark, Sweden, Finland, Latvia and Lithuania to be traded on a single platform. The five markets will also be connected to the fixed income market in Iceland, which already uses Genium INET technology.

According to Nasdaq OMX, its Genium INET platform offers sub-100 microsecond latency with throughput capacity of over 1,000,000 messages per second. A spokesman confirmed that Genium INET is able to support both order-driven and request-for-quote bond trading.

“Today NASDAQ OMX delivers another important step on our roadmap to strengthen the Nordic and Baltic financial markets,” said Hans-Ole Jochumsen, president, Nasdaq OMX Nordic. “With the Genium INET launch, we achieve lower latency, higher capacity and IT efficiencies for our fixed income markets. The migration also means that all NASDAQ OMX Nordic and Baltic cash and derivatives trading of equities and our fixed income activities now take place on INET technology.”