Recently both the Financial Times and the Wall Street Journal reported a move by senior traders at investment managers and Wall Street banks to address the pressing need for improved liquidity and a new marketplace for bonds. These discussions included an identification of a centralized, electronic venue that will connect all parties for the execution of Corporate Bonds. The move, long delayed, is made more urgent now as the industry faces the first in a series of regulatory mandates coming off Dodd-Frank, most immediately the upcoming Volcker Rule. The Volcker Rule will limit proprietary trading and will fundamentally alter market structure. In addition, the need for an exchange-like facility is driven by the concern that large money managers have regarding the ability to transact positions as trading moves more towards an agency model.
The industry discussion anticipates that an electronic exchange that would be an open and active marketplace might be achieved within a year.
Yet the envisioned centralized marketplace already exists and is operating each trading day.
Bonds.com, Inc. (Bonds.com) fulfills and delivers on all the criteria articulated in the industry conversation. As an SEC registered ATS and FINRA regulated broker-dealer, Bonds.com serves the liquidity and execution demands of fixed income professionals. It is a centralized marketplace for the real-time electronic trading of U.S. dollar-denominated fixed income products worldwide to all market professionals, providing access to liquidity and execution on an agency basis with all-to-all connectivity among counterparties.
For the first time in the fixed income markets, Bonds.com displays live and executable orders rather than requests for quotes. Bonds.com drastically reduces the cost of supply meeting demand. This is achieved by matching buyers and sellers in a fair and equal electronic trading environment via its centralized order book. The net result for all clients is that Bonds.com creates the opportunity to achieve best execution.
George O’Krepkie, President of Bonds.com said: “We recognized over two years ago the need for a centralized marketplace for bond trading. The fixed income space has lagged significantly in integrating the benefits of advanced technology when compared to other financial instruments. The industry is now demanding an agency electronic approach. Bonds.com provides a comprehensive solution that at once meets industry and regulatory needs, while also maintaining the important relationships between counterparties that have historically accounted for the success of the market.”
Recent key performance measures issued by Bonds.com are telling: Seventy thousand live prices are available in 12,500 U.S. Corporates with 85 million price updates daily across 300 contributing counterparties.
Tom Thees, CEO of Bonds.com said: “Philosophically, it just makes logical sense that connecting all the players on one level playing field has the best chance of enhancing and augmenting the already available service and liquidity that dealers provide. That is what Bonds.com does every trading day. The recent discussion is long overdue. Market structure is changing, and a centralized approach, delivered electronically, goes a long way to assuring the ongoing viability and health of the fixed income markets. Our ability to deliver today on all of the specifications detailed by concerned industry professionals demonstrates that our model is the solution that is both demanded and necessary. We look forward to contributing to the discussion as it proceeds and to providing our approach - a solution already in place.”