Liquidnet Europe trebles bond liquidity since launch

Fixed income dark pool appears to get off to good start in crucial early months of operation.

Liquidnet said it has trebled weekly liquidity on its European fixed income platform since launching it in September last year.

The firm’s fixed-income dark pool, which was developed following its acquisition of Vega Chi, aims to bring a similar experience to its existing equities franchise, scraping the buy-side’s blotters to help them match blocks and execute larger trades.

In October 2015, a month after the bond dark pool launched, Liquidnet saw weekly liquidity of $3 billion in the EMEA region, but in February this had risen to $9 billion.

The first performance figures released by Liquidnet also show it has seen a total of $350 million of fixed income trades since launch, with $108 million traded in February. Average indications are $5 million while average execution size is $3 million.

Mark Pumfrey, CEO of Liquidnet Europe, said: “We’re very pleased with the response to our fixed income offering so far. Our main focus now is on onboarding new members and integrating with more Order Management Systems to widen the pool. As more members come on board, liquidity will continue to improve.”

Liquidnet said it now has about 150 members using its fixed-income service, with most being existing users of its equities dark pool. In the US, it has also signed up select dealers, though it not currently doing so in the EMEA region.

Pumfrey added that it has seen a geographically diverse user base in Europe as a number of insurers in Europe hold big fixed income positions. By contrast, its equities trading has been more heavily focused on the UK, though Liquidnet said it continues to expand its membership into continental Europe.

Globall, Liquidnet’s bond pool sees $5 billion of average daily liquidity with an average execution size of $1.8 million. Total fixed income trades are $800 million.