Visible Markets launches bond auction marketplace

Visible Markets launches bond auction marketplace

Boston-based start-up Visible Markets has launched its Internet-based auction marketplace for mortgage-backed and asset-backed securities with 40 leading buy-side and sell-side institutions signed up for the service.

"We are fortunate that numerous traders and portfolio managers, representing some of the largest institutions, have played an integral role in the design of the system and have successfully traded on our marketplace over the past two weeks," says Brian Robertson, co-founder and CEO of Visible Markets. "We think the involvement of industry leaders in the launch of Visible Markets will bring more liquidity and price transparency to the bond markets."

Over $400 billion changes hands daily in the bond markets, which is five to six times the volume in the equity markets. Unlike the rise of online brokerages, which have over the past few years provided individuals with greater access to the equity markets, the fixed-income marketplace has been relatively untouched by the Internet and new pricing mechanisms.

"While bond trading comprises a huge segment of the securities industry, a substantial percentage of trading has yet to be migrated online. It will. The current operational and pricing inefficiencies cannot continue to last in this new Internet-based world. We believe the OTC marketplaces that will emerge as winners in this arena will employ auction-based strategies, offering users something more than just the ease of Web trading," says Larry Tabb, group director, securities & investments, Tower Group. "Visible Markets has leveraged this idea in the secondary mortgage and asset-backed markets. It combines price transparency with an auction technology that works well with less liquid securities. This novel approach should satisfy parties on both sides of the transaction."

Visible Markets' trading hours are from 8:00 am to 5:00 pm Eastern Time. Sellers post an auction using one of the following price conventions: spread to swap curve, spread to on-the-run, spread to off-the-run, discount margin, or spread to an interpolated curve. Trade history is available on a Cusip by Cusip basis to all participants. As Visible Markets users, both buyer and seller see the closing price of all orders and can view the bid stream of each individual auction.

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