SIX Swiss Exchange is to launch an electronic platform for trading corporate bonds in the first half of 2015. This platform will allow SIX Swiss Exchange to provide market participants with a more efficient trading of larger blocks also in less liquid issues. The new platform's innovative trading model was developed in close cooperation with current sell-side market participants.
The launch of the new trading platform in the first half of 2015 will result in the creation of a multilateral liquidity pool for the trading of large order of corporate bonds. This will help eliminate the disadvantages of inefficient off-exchange trading: insufficient liquidity, small trade sizes, time consuming price negotiations, as well as the worry that prices could be negatively influenced by premature disclosure. An innovative matching logic brings market participants together and ensures a regulated market is created in which protection against information leaks is assured, pricing and volumes are agreed electronically and execution is completed without any negative market impact.
The new trading platform is part of SIX Swiss Exchange’s “Over the Exchange initiative”, which offers new exchange services to the exchange’s broadly diversified client base. SIX Swiss Exchange is therefore providing an alternative to the highly fragmented bond trading arena, most of which is conducted outside an exchange infrastructure and is therefore inefficient. The new trading platform will facilitate efficient, competitive execution particularly for less liquid corporate bonds and large trades of at least two million in EUR, GBP or USD.
The platform will be domiciled in Switzerland and subject to regulatory supervision by the Swiss Financial Market Supervisory Authority (FINMA). SIX Exchange Regulation will be responsible for the market supervision. Algomi Ltd. was selected as the technology partner for the development of this industry-leading solution.
Christian Katz, Division CEO Swiss Exchange, comments: "With the new electronic trading platform for corporate bonds, we are creating a regulated market that will benefit not only market professionals but also provide greater efficiency for their clients, in other words pension funds and asset managers. Trading participants in this electronic platform will be able to transact large orders of bonds simply and efficiently via the new liquidity pool and exchange infrastructure. This not only lowers transaction costs but also improves risk management."