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Liquidnet expands into fixed income market
18 March 2014
Trading network to acquire Vega-Chi
Global institutional trading network Liquidnet will enter the
fixed income market following its acquisition of bond trading
"There has been a massive increase in corporate bond issuance
and at the same time a depletion of capital that dealers can
use to facilitate trading. The result has been increasing
difficulty among investment managers and dealers in accessing
liquidity," said Seth Merrin, founder and CEO of Liquidnet.
"To fix this liquidity drought over the long term, it is
important for market participants to come together and
establish new systems and processes and an open platform that
will facilitate the flow of liquidity within the corporate bond
market more efficiently."
Initially, Vega-Chi’s trading platform will
continue to operate separately from Liquidnet’s
core equities business. The platform is currently available to
all approved market participants who trade US and European high
yield bonds as well as European convertible bonds.
Through the platform, market participants are able to source
liquidity in one place to execute their institutional, large
scale bond orders.
Liquidnet will leverage its network to create a critical mass
of liquidity focused on the corporate bond market. In addition,
Liquidnet and Vega-Chi expect to introduce the trading of US
investment grade corporate bonds this year.
According to a recent research report issued by the TABB Group,
there is high demand for a corporate bond market structure that
allows diverse sources of liquidity to connect more easily.
More than three-quarters of the buy side firms TABB spoke with
said that now is the time for an alternative trading system to
help provide greater transparency and support for the
liquidity-strained corporate bond market.