Trading systems provider TradingScreen has started work on creating a new multilateral trading facility for European corporate bonds.
The move is in response to the specifications issued by the Cassiopeia Committee on 26 April 2010, which aims to identify ways to boost liquidity in the corporate bonds market, which has suffered from the drying up of markets at the height of the financial crisis. The firm expects the platform to be ready by December 2010.
The Cassiopeia Committee was formed by the French government's economic ministry to provide Europe with secondary bond platforms by the end of 2010. It has set out an ”expression of needs' document, which defines the criteria for platforms that the Committee will consider. So far, several companies have taken up the initiative, including a bid from exchange group NYSE Euronext.
Two other bids have been made although the parties behind them will not be revealed until September according to TradingScreen. The Cassiopeia Committee will analyse each bid, and decide whether or not it can go forward.
TradingScreen, which is largely known for its multi-broker and multi-asset execution management systems for the buy-side, has named its new platform Galaxy. The platform aims to create a liquid and transparent market for the exchange trading of corporate bonds on a pan-European basis, and will be open to any regulated institutional participant authorised to trade corporate securities in Europe. Clearing of securities traded on the platform will be handled by clearing house LCH Clearnet.
“The buy-side and the sell-side alike are looking for the next step in terms of efficiency for the large corporate bond market,” said Philippe Buhannic, CEO of TradingScreen. “The current venues are not providing the answers to systemic liquidity issues, the cost of secondary market market-making and the increasing transactional costs,” he added. “This new venture objective is to rally the participants around a model that dramatically improves the current system and brings benefits to all.”
Michel Croz, TradingScreen sales France/Benelux, said, “If there is a chance of changing the way the market is organised today, then it's good. Because you have a push from government there is a good chance of takeoff. If it does in France, it's going to spread to other countries.”