A new dark pool launched by New York-based global trading firm Liquidnet Hodings Inc. will allow institutional investors in the U.S., Canada, and Europe to trade corporate bonds with anonymity.
Liquidnet announced that it has signed up 120 asset managers for its fixed-income dark pool, which aims to build a critical mass of institutional liquidity for corporate bonds. Initially, it will allow for trading in U.S. and European corporate bonds, emerging-market corporate bonds and European convertible bonds.
“The fixed-income market has been woefully underserved by technology and, as concerns about a liquidity crunch continue to rise, it needs a transformation,” says Seth Merrin, founder and CEO of Liquidnet, in a statement. “Liquidnet is uniquely positioned to provide a more efficient trading solution and experience that delivers a critical mass of natural liquidity that minimizes information leakage and maximizes best execution.”
Liquidnet’s trading venue has been built with input from its asset-management clients, along with its experience operating a dark pool for the institutional equity trading, the firm says. As with its approach to equities, the Liquidnet’s fixed-income dark pool will allow traders to easily have their orders swept into the pool with minimal changes to existing workflow.
“The corporate bond market is desperate for innovation and improved efficiencies, and we’re starting to see several new trading platforms emerge,” says Kevin McPartland, head of research for market structure and technology with Greenwich Associates. “Greenwich Associates research found that 80% of investors find it extremely difficult to execute large block trades; as such, a platform that can help ease that burden while not causing a shift in the trader’s workflow is a necessary part of the path forward.”