Liquidnet moves into fixed income market through Vega-Chi acquisition
18 March 2014 | 4260 views | 0
Institutional trading network Liquidnet is moving into the fixed income market through the acquisition of bond trading platform Vega-Chi. Financial terms of the deal were not disclosed.
Launched in 2010, Vega-Chi is available to all approved market participants who trade US and European high yield bonds as well as European convertible bonds. The platform currently has in excess of 150 participant firms and has received more than 36,000 client orders with notional value in excess of $73 billion.
Initially, Vega-Chi's trading platform will continue to operate separately from Liquidnet's core equities business. Liquidnet says that it will use its own extensive network to create a critical mass of liquidity focused on the corporate bond market.
In addition, the pair expect to introduce the trading of US investment grade corporate bonds during this year.
According to recent research from Tabb Group, more than three-quarters of the buy side firms think that now is the time for an alternative trading system to emerge to help provide greater transparency and support for the liquidity-strained corporate bond market.
Seth Merrin, CEO, Liquidnet, says: "There has been a massive increase in corporate bond issuance and at the same time a depletion of capital that dealers can use to facilitate trading. The result has been increasing difficulty among investment managers and dealers in accessing liquidity.
"To fix this liquidity drought over the long term, it's important for market participants to come together and establish new systems and processes and an open platform that will facilitate the flow of liquidity within the corporate bond market more efficiently."