A select group of large Asset Managers and TradingScreen, the leading independent provider of liquidity, trading, and investment technology via SaaS, announced today their intention to launch the first Buy side designed crossing platform for Fixed Income corporate bonds.
TradeCross will cover all segments of the credit market and will offer numerous new and innovative trading models that are not offered today on traditional platforms with an overarching goal to create a much more efficient way to trade these securities. Key elements of the initiative are to insure complete trade confidentiality and reduction of market impact, especially during periods of market stress. It has been carefully designed with the Buy side needs in mind and will continue to evolve as market changes dictate.
The corporate bond market is currently facing an unprecedented liquidity crisis that originates, among other factors, from a significant reduction in the market making capability of the traditional sell side institutions. New regulatory constraints have put major strains on dealers’ capabilities to hold large fixed income securities inventories for extended periods of time. In addition, a surge in corporate bond issuance, especially from new geographical areas, has increased the need for liquidity and has fundamentally redrawn the Fixed Income market map. As a result, it is increasingly difficult for investment managers and dealers alike to access liquidity and execute their trades. Faced with these structural changes, Fixed Income Investors have decided to take the lead and a number of Buy-side firms are getting organized by setting up TradeCross to develop and explore new models to answer their needs at a time where bond trading is moving rapidly towards an all-electronic, all-to-all market structure. TradingScreen’s Galaxy MTF technology will power this effort. TradingScreen’s independent approach endeavors to provide access to currently inaccessible liquidity anonymously and to use TradingScreen’s Galaxy MTF as a medium to cross with other market participants.
“Access to ample liquidity in the current market environment is challenging. Like many Buy side we are researching additional channels to complement the current coverage model in order to locate and execute trades efficiently. The TradeCross approach is innovative and makes it a viable partner for our needs. The initiative is backed by TradingScreen’s recognized experience and technical expertise in this sphere which is a plus. We look forward to participating in this project.” said Brett S. Chappell Head of Fixed Income Trading, Nordea Investment management and Chairman of the initiative.
“Fixed income is facing tremendous odds in its core trading infrastructure: all-time high issuance, creation of new emerging markets, evaporating liquidity, scarce intermediating capital, lack of solid electronic infrastructure, an outdated trading model, and absence of definitive best execution methodology. All of these factors make the Fixed Income portfolio management and trading seriously limited compared to the sophistication of other assets classes that have embraced change earlier. In line with TradingScreen’s core mission to simplify global markets, we felt that it was time to present the Buy side with alternative tools that will help them resolve this new market paradigm. We have nurtured TradeCross with some of the most significant buy-side players over the last years and we plan to make it available to a wide audience. All in all, it will bring a complete new way to trade Fixed Income credit,” said Philippe Buhannic, CEO of TradingScreen.
TradeCross counts Axa Investment Managers, Groupama AM, Foreign & Colonial AM, EXOE, La Banque Postale AM, Natixis AM Finance, Nordea Investment Management among its numerous participants. The TradeCross founding members will guide the initiative to success in the coming years.
TradeCross platform will be presented officially to the Buy side at TradingScreen’s annual fixed income forum in Paris on November 19th.