Coredeal, the European screen-based exchange for international credit trading, is to merge its technology and trading platform with EuroMTS.
The new platform is to be based on the MTS Markets’ Telematico trading infrastructure. Coredeal was launched last year by the International Securities Market Association (Isma) and a group of eleven major banks and securities houses, but it has failed to generate significant volumes.
"A new and innovative business model is being agreed and, once adopted, will pave the way for a larger pool of market makers and a greater degree of depth and liquidity," say the companies in a joint statement.
Under the proposed alliance, Coredeal will issue new ordinary shares to EuroMTS representing 15% of the share capital in the company. The exchange will be branded “Coredeal MTS” once the arrangements are finalised and approved.
It is intended that Coredeal MTS will continue operating as a recognised investment exchange, regulated by the UK’s Financial Services Authority (FSA). The platform will also continue to operate on the basis of anonymous trading and settlement through the central counterparty arrangements provided by TradeGO (a subsidiary of Euroclear Bank).
John Langton, Isma’s chief executive and secretary general, says: “We have made it clear for some time now that there is considerable scope for consolidation amongst the providers of electronic trading services to the international debt markets. This new business model will combine the best attributes and strengths of both systems, bringing significant benefits to the international debt market in the EU.”