Last week Liquidnet posted record numbers for electronic new issue trading across volume, average trade size and participants, as institutional adoption demonstrably surges.
Speaking to The TRADE, David Everson, head of trading, fixed income EMEA at Liquidnet asserted that the goal at Liquidnet is to electronify the full lifecycle of a bond. He explained: “With liquidity at its peak in the initial days of issuance we felt the market needed a more efficient way of trading new issues. Traditionally, grey markets have traded over IB chat or the telephone which can lead to multiple conversations, multiple data points to assess and no guarantee of a trade.
“By centralising liquidity onto an orderbook we’re able to provide the market with a live “firm” picture of where the issue is trading, resulting in greater transparency, and ultimately leading to reduced execution costs.”
Specifically, last week saw Liquidnet’s orderbook break all previous records, with traded volumes up 617% year-on-year, and up 190% from the previously busiest week (in November 2023).
Elsewhere, Liquidnet posted a surge in the number of active weekly users, with new issues trading participation the highest ever recorded.
In addition, the average trade size for the week commencing 8 January also broke records, as well as the volume of new issues executed through Liquidnet the largest ever.
Everson explained that these results show a clear desire from investors to lock-in higher yields: “As the first full week of the year comes to a close and Europe’s primary market reports record breaking issuance, the Liquidnet orderbook has seen a surge of activity, smashing through all previous records.
“This week has been extremely busy for us, we were expecting a lively start to the year but the level of demand particularly in some of the Government issues has been incredible. With Italy, Spain and Belgium (amongst others) receiving unprecedented over-subscription levels, it’s clear investors are keen to lock-in higher yields while they still can and with the strong tone at the start of the week issuers had the perfect opportunity […] We saw record numbers of users on the platform and continue to see more institutional adoption from both buy- and sell-side, helping to drive the average trade size to a record high.”
Read more: Liquidnet adds live deals through OMS to primary markets offering
Speaking to the future outlook following these results, Everson told The TRADE that while issuance was not likely to continually break records, it is expected to continue on the up.
“Last week was extremely busy, the level of demand was unprecedented, but with a moment of respite today, we expect to be all-aboard the issuance train again tomorrow. It would take some doing to hit the record-breaking volumes of last week, but we do expect issuance to continue exceeding the usual weekly average.”