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Best Fixed Income Trading Platform
Bloomberg is a giant in the data space, and no less so in European fixed income. Its ALLQ platform accounts for about 37% of European government bond trades, and 70% of investment-grade credit deals, according to Greenwich Associates. The ALLQ platform differs from other trading venues in that it does not have a full regulated status – as it simply publishes bids and offers, and provides a communication method for interested parties to communicate it does not technically require one. However, the company is in the final stages of negotiation with the UK Financial Conduct Authority to extend its multilateral trading facility licence to cover trading in cash bonds and derivatives, as regulations force these products away from over-the-counter status and on to regulated venues. This would become a part of Bloomberg Trading Facility, which launched in 2015 and is the company’s first regulated European venue.
Liquidnet Fixed Income
Liquidnet made its long awaited push into fixed income with the launch of a corporate bond trading platform in September 2015. It was a natural extension of the dark pool operator’s equity trading service and at first glance, the numbers appear to be strong. In March 2016, the company said it had increased its member base for the platform from its launch number of 120 to 150, while it had executed a total of $870 million in trades during January and February. Its average trade size during that period was $1.9 million. The firm is one of several looking to capitalise on the changing structure of the fixed-income market, where primary dealers have retrenched in recent years and no longer offer the liquidity they once did. It has also recently strengthened its expertise in market-structure areas, hiring former Tabb Group analyst Rebecca Healey as its head of market structure and strategy.
Tradeweb may be the go-to platform for e-trading in government bonds, but MarketAxess, another US firm, is making inroads into European credit. Since the launch of its Open Trading model, which allows investors and dealers to submit an enquiry, anonymously, to the entire MarketAxess network, it has grown steadily, accounting for $944 million of traded volume in European credit for the first quarter of 2016. As with Tradeweb, MarketAxess has also removed the traditional cap of six dealers on an RFQ. The UK referendum on EU membership also provided a boost for the group, sending Eurobond trading volumes soaring to $35.6 billion in the second quarter of 2016, a 126% from the second quarter of 2015. Its most recent release has been the introduction of Private Axes, a protocol that allows bond-market participants to anonymously negotiate block trades in corporate bond, emerging market debt, agency and Eurobond trading.
Owned by the London Stock Exchange, MTS BondVision has been steadily cultivating a decent market share. The multi-dealer-to-client platform accounts for roughly 10% of electronic trading in European government bonds, and in January 2016, it launched non-US denominated corporate bond trading for US, UK and Swiss participants on MTS BondsPro. The MTS Group as a whole says that it has an average volume of €100 billion each day across 500 unique counterparties. In October 2015, it expanded its B2SCAN price-discovery tool to include covered, SSA and government bonds traded on BondVision, providing coverage of liquidity on up to 20,000 axes. It also added German dealer BayernLB as a liquidity provider at the time, the first Landesbank to join the service.
Tradeweb has continued to evolve its European fixed income offering, as the market is upended by new regulation due in 2018 through the review of the Markets in Financial Instruments Directive. The company, owned by Thomson Reuters and a group of large bond dealers, accounts for around half of all electronic trading in European government bonds, and a fifth in credit, according to research from Greenwich Associates, and unveiled its new trading model, FlexRFQ, on May 4. The new model takes the existing request-for-quote mechanism and enables investors to add more dealers to their request if they don’t receive prices from already-specified recipients within an allotted time. The firm has also seen success with its new ‘axe’ functionality, which shows indications of interest from a dealer which can be executed by buyside traders. In June, it said that it had seen client uptake of the axes increase by 131% since the beginning of the year.