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Automated pre-trade price discovery mechanism integrated into Bloomberg Professional

09 February 2016  |  1458 views  |  0 Source: Bloomberg

Bloomberg announced today that the Bloomberg Benchmark Magenta Line™ ("BMRK"), an automated pre-trade price discovery mechanism for more than 10,000 U.S. corporate bonds and issuers, is now fully integrated into the Bloomberg Professional service.

BMRK allows buy- and sell-side traders and risk managers access to market-calibrated prices using the most recent real-time market data, security master data and statistical modeling. Bloomberg acquired the Magenta Line from Benchmark Solutions in 2013.

"The corporate bond market can be complex and thinly traded, which can often raise concerns about liquidity," said Ben Macdonald, Global Head of Product at Bloomberg. "By giving more pre-trade transparency where it is needed most – where there are few quotes and no recent trades in the security -- incorporating BMRK into pricing engines will allow buy- and sell-side traders to make markets in more bonds with less effort."

The BMRK Transparency screen displays real-time movements in credit spreads based on market data (trades and quotes) and synthetic observations from BMRK's issuer curve model.

The BMRK Transparency screen displays real-time movements in credit spreads based on market data (trades and quotes) and synthetic observations from...

"With the help of indicative pricing from Bloomberg's BMRK, it is now possible to quantify opportunities and costs. Bloomberg is helping us determine which market data is driving prices, allowing us to make better-informed decisions," said Brian McGrath, Managing Director of RW Baird High Grade Credit Trading.

Unlike composite prices, which are generally based solely on dealer-contributed data, BMRK relies on reported trades and advanced analytics applied to each bond's cashflows and issuer information. Key features of BMRK include:

• Automation of generally accepted pricing practices with updates every 30 seconds, providing increased price transparency for traders and assisting or eliminating manual credit spread adjustments required during periods of market volatility or decreased volume.
• Coverage of high grade and high yield issuers. Distressed and defaulted debt types are not included at present.
• Availability through the Bloomberg Professional service, Trade Order Management Solutions (TOMS) for the sell side and Trading System Order Execution (TSOX) for the buy side, and Bloomberg's Market Data Feed, B-PIPE, for enterprise customers. 

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