R3 founder brings blockchain to bond trading with new institutional platform

David Rutter has founded a new trading platform, LedgerEdge, built using blockchain and artificial intelligence technologies for the corporate bond market.

Industry veteran and founder of blockchain consortium R3, David Rutter, has confirmed plans to launch a new corporate bond trading platform that will also use distributed ledger technology.

Rutter has founded a new company, known as LedgerEdge, that aims to bring the latest technologies to institutional-grade trading services and protocols in the corporate bond market.

LedgerEdge is using blockchain technology, artificial intelligence and secure enclave computing to help traders seek liquidity on the platform, find and share data, and execute trades in one ecosystem. The new platform will operate as a multilateral trading facility in the UK, and will obtain licenses to operate in the US.

“The secondary market for corporate bonds is growing and is ripe for an evolution, but existing platforms are not fit for purpose,” Rutter commented. “Data is monetised by platforms and it is leaked across fragmented, opaque markets, decreasing execution quality. Working with the industry, we will build a platform that solves the challenges of locating and promoting liquidity and data ownership once and for all.”

Rutter is considered an industry veteran after building other trading platforms for fixed income, including BrokerTec, which is now part of CME Group, and LiquidityEdge, which MarketAxess acquired last year for $150 million.

He also founded blockchain consortium R3 and will remain chief executive of the firm, while LedgerEdge implements a similar collaborative approach to R3 and work with market participants to adopt and test new technologies.

David Nicol, head of digital assets at R3, will lead the new LedgerEdge business as chief executive, while former ICAP veteran Ian Chicken becomes chief operating officer, and Bob Bose, who previously worked at NYSE Euronext and Santander, takes on the role of chief technology officer.

“The fundamental desire that all traders share is to execute efficiently and effectively, with minimal data leakage,” LedgerEdge chief executive, Nicol, said. “Difficult and persistent challenges such as these require a holistic approach and cross-industry collaboration.”

Finding liquidity and executing trades without data leakage were listed as key challenges that market participants face in the corporate bond market. The market is also behind other asset classes in terms of the adoption of new technologies and digital solutions, with just 30% of the $59 billion daily traded volumes being executed via electronic channels.  

“Illiquid areas of the corporate bond market have challenged participants for years,” Kevin McPartland, head of market structure and technology research at Greenwich Associates, said. “Innovative solutions that further expand data access while limiting information leakage will prove a key piece of the market’s next evolutionary stage.”