Recognizing the need for improved price transparency in the odd-lot fixed income markets, BondDesk Group LLC and S&P Capital IQ today announced a new pricing service for U.S. corporate and municipal bonds, Odd-Lot Valuations.
The evaluated prices in this new service will be derived using S&P Capital IQ's proprietary methodologies and factor in market data from the BondDesk ATS, the largest odd-lot fixed income trading venue in the United States.
Odd-Lot Valuations will include bid- and ask-side odd-lot (<$1 million) evaluated prices, a unique market range around these prices and a flexible suite of tools to deliver these outputs to fixed income marketplace participants including retail brokers, market makers, buy-side institutions, interdealer brokers, data providers and alternative trading systems (ATSs).
This innovative service will bring a degree of confidence to the execution of odd-lot fixed income trades, provide compliance departments with a consistent way to help assess trade execution quality, and provide investors with valuations that are more indicative of odd lot transactions.
"There are often differences between the round-lot evaluated prices that investors see before making a trade and the prices at which their odd-lot trades get executed," said Howard Edelstein, CEO and Chairman of BondDesk Group LLC. "What the industry needs is a pricing service that reduces this discrepancy and provides an independent benchmark to help assess price quality. Our service will provide these benefits."
"The combination of S&P Capital IQ's deep experience in evaluated pricing and BondDesk's unique market data and expertise in odd-lot fixed income trading represent a powerful advantage for professional investors in the fixed income world," said Lou Eccleston, President, S&P Capital IQ. "I believe the quality of our prices and the availability of a corresponding market range will bring higher levels of certainty and efficiency to the odd-lot market.
"This much anticipated service, now expected to launch in the fourth quarter of this year, will initially cover U.S. corporate and municipal bonds," said Frank Ciccotto, Senior Vice President, S&P Camp;P Capital IQ. "Users will have the choice of having it delivered through BondDesk's workstations or one of BondDesk's or S&P Capital IQ's data feeds."
Steven Shaw, Managing Director, BondDesk added, "Approximately 90% of corporate and municipal bond trades are less than $1 million in size. It's crucial for participants in this marketplace – investors, traders, financial advisors, compliance officers and portfolio managers – to have a relevant benchmark for trade execution and portfolio pricing. Now they will."