BlackRock to fold Aladdin trading network into MarketAxess

Source: BlackRock

BlackRock, Inc. (NYSE: BLK) and MarketAxess Holdings Inc. (NASDAQ: MKTX) today announced a strategic alliance to create a unified, open trading solution in the U.S. credit markets.

The alliance between BlackRock’s Aladdin Trading Network (ATN) and MarketAxess, the industry leader in electronic credit trading, is designed to help reduce liquidity fragmentation and improve pricing across credit markets, while expanding both firms’ open trading efforts.

MarketAxess will run electronic trading and broker dealer operations, which will be connected to BlackRock’s enterprise investment system, Aladdin, that hosts $14 trillion in BlackRock and Aladdin client assets. BlackRock will provide buy side leadership, input on strategic direction, and innovations in trade execution capabilities for clients. The two firms will work together on product and business development.

The alliance evolves Aladdin Trading Network into a fixed income trading portal that consolidates fragmented liquidity for the benefit of Aladdin clients, significantly expanding access from within Aladdin to the broader marketplace. The partnership leverages the connectivity and distribution capabilities of MarketAxess to enhance access to liquidity and improve pricing for BlackRock asset management and Aladdin clients quickly and effectively. More than 1,000 asset managers, insurance companies, other investor firms and broker-dealers are active users of the MarketAxess platform.

“This partnership enables Aladdin clients to tap into a deeper liquidity pool without ever having to leave Aladdin, while maintaining their existing trade workflow,” said Ryan Stork, Managing Director and Global Head of BlackRock’s Aladdin Business. “Aladdin Trading Network serves to improve liquidity and enhance the Aladdin value proposition, and this alliance is a critical step forward in evolving open trading solutions on behalf of our clients.”

MarketAxess has developed a robust suite of electronic trading solutions, helping its clients to source liquidity by allowing them to efficiently reach the extensive MarketAxess community of institutional credit market participants. The alliance with BlackRock combines order flow from the world’s largest asset manager and its community of Aladdin users with MarketAxess’ broad network of investors and dealers to create a centralized credit trading marketplace.

“Through this strategic alliance with BlackRock we are delivering on our commitment to provide an independent, comprehensive electronic trading platform to address liquidity challenges in the credit markets,” said Richard M. McVey, Chief Executive Officer of MarketAxess. “The work with BlackRock will comprise our full range of e-trading options including multi-dealer RFQ, Market Lists, Client Axes and electronic order matching. We will benefit from BlackRock’s influence and thought leadership in developing new solutions for credit trading, and from seamlessly connecting to their extensive Aladdin community. We think this alliance further validates the advantages of the MarketAxess platform as the logical venue for credit market liquidity to converge and help reduce fragmentation.”

“Our two firms have a long-standing relationship, complementary strengths and a shared belief that the gradual shift towards more open trading in fixed income will require broad participation from the buy side and behavioral change among investors,” said Richard Prager, Managing Director and Head of BlackRock’s Trading & Liquidity Strategies Group. “The beta launch of Aladdin Trading Network in 2012 allowed us to test our trading approach successfully within the Aladdin community and prove the model with clients. Our alliance with MarketAxess is a logical evolution and we continue to anticipate changing trading practices and pursue innovative liquidity solutions across asset classes.”

BlackRock and MarketAxess have executed a Letter of Intent and commencement of operations is subject to finalization of a definitive agreement, which the parties expect to complete within the next several weeks. Project planning for technology integration is already in process.

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