MarketAxess is set to launch the first opening and closing auctions for fixed income, as part of an effort to enhance price discovery and liquidity for trading US credit.
Chris Concannon
The new offering will mark the first standardised market-wide auction protocol designed for this market and was developed in consultation with a variety of buy-side and sell-side participants, including AllianceBernstein, BlackRock, DWS and State Street Investment Management.
The launch is expected to enhance volume and liquidity for fixed income market structure, to reduce the impacts of volatility and increase efficiency and transparency for participants in this segment of the market.
Chris Concannon, chief executive of MarketAxess, said: “With the growth of fixed income ETFs, credit derivatives, and portfolio trading, the fixed income market’s needs are rapidly changing. We felt it was important to build a protocol to support price formation and liquidity at the most critical times of the day.”
The new auction protocol is expected to be made available to clients and dealers over the next few weeks.
Read more – MarketAxess to launch Mid-X protocol in US credit
Specifically, clients will be able to access this new offering at the beginning and end of the trading day for US high-grade and high-yield bonds, through MarketAxess’ X-Pro trading platform.
Previously, opening and closing auctions have been available in equities and derivatives markets, with closing auctions able to account for up to 20% of daily volume on index rebalance days in equities.
“Today’s fixed income markets are evolving quickly and there is a clear need for a market-wide auction protocol where price can be formed and liquidity can be unlocked,” said Kat Sweeney, global head of data and ETF solutions at MarketAxess.
“Auctions in derivatives and equity markets have proven to reduce volatility, increase transparency and concentrate liquidity.”