Vega-Chi has reported the successful debut of its buy-side only trading platform for US high-yield and distressed fixed income products, with over 40 clients supporting the venue from launch.
Vega-Chi lets institutional investors trade directly with each other using an electronic trading platform and without the need for an intermediary, offering members better prices and greater control over trades. The US venue, which uses the same technology as the firm’s European offering, expects to grow its member base to over 60 in the coming months.
Users of Vega-Chi pay between 3-6.25 cents per executed trade – which the firm says is considerably lower than the bid-offer spread in the over-the-counter market – with no upfront or ongoing costs for use of the platform.
“Today marks an important step for the credit markets,” said Constantinos Antoniades, CEO of Vega-Chi. “For the first time, the buy-side has an interface to trade freely with each other, directly matching orders with others in the institutional investment community. This provides a compelling, cost-effective alternative to the dealer-to-client market structure, which has for so long been the only option available for market participants.”
“The credit markets are facing unprecedented regulatory and capital challenges. By directly sourcing liquidity from buy-side participants, Vega-Chi will provide institutional investors with superior pricing, while freeing up dealers to focus on higher-value, less capital-intensive services,” said Brad Golding, managing director at buy-side firm Christofferson Robb.
As part of capital adequacy measures in Basel III and the Dodd-Frank Act’s Volcker rule, the ability of banks to facilitate fixed income trading through use of capital commitment is set to diminish, leaving the market to look for new solutions for trading fixed income.