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Middlemen the Key to Corporate Bond Market’s Electric Dreams – Reuters

Electric Dreams“The only electronic platforms that have succeeded are those with a dealer on the other side who is willing to commit capital and facilitate the transaction,” said Rick Rezek, a senior portfolio manager at Schroders. “I wouldn’t want to put something on a platform at BlackRock and let them see what I am doing, and they wouldn’t do that either.” Full Article 
Comments
  • Merlin
    MerlinNovember 13, 2015"What I would like to read about is the progress that these alternative platforms are making. How many participants do they REALLY have? How many fully executed documents do they have back? How many firms are executing transactions on their system (and paying for them)? What is their trading volume? Does anyone really care any more how many orders any of them might have? All you have to do is look at poor Bondcube that was hyping their multiple billions of orders days…"
  • Goose
    GooseNovember 13, 2015"Break out the torches and storm the castle! I love all this talk about eliminating the unnecessary dealer/liquidity provider, we don’t need them!! Question, what would the market of the most liquid, regulated price formation market in the world, look like if everyone who is being compensated in some way to provide liquidity (market structure, maker/taker, etc) decided to turn off the switch all at once. How many bids/offers would be left, and how many buy side firms w…"
  • Wolfman
    WolfmanNovember 13, 2015"There's so much here to work with. It seems that the reality is beginning to sink in. e-commerce solutions don't eliminate the need for all traditional methods of commerce. Hell, Amazon has opened a physical bookstore! Bonds aren't equities. Some bonds may trade like equities, like benchmark treasuries, but that's a function of a bond with no risk of default (I hope!) being used as a rate product, not as a credit trade. Anyhow, back to the article. First, Aladdin has…"
  • Zob
    ZobNovember 13, 2015"Having no special sympathy or otherwise for Market A, all I can say is that by adding a simple protocol to their offering rather than 'revolutionising' the universe they have unlocked liquidity (especially in Europe) and good to them. Fintech guys in this space who are picking up awards for innovation and 'disruption' left right and center but haven't billed a$ or printed a trade are eventually going to be found out and the gullible anti-sellside, anti-broker, anti-mi…"

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6 Comments on "Middlemen the Key to Corporate Bond Market’s Electric Dreams – Reuters"

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Charlie
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One can’t help but think the writers have hit on something when they allude to the role of the primary markets in propping up the popularity of dealer to client systems such as MarketAxess. MarketAxess does of course provide very valuable best ex services, or at least provides a measure of best ex as historically recognized by regulators and compliance teams i.e. the best of three or five quotes. What would happen to the investors allocations in hot issues if they used say Liquidnet? If an investor misses out on a new issue allocation his alpha generation takes a hit… Read more »
Hollywood
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“It’s been the realm of the big bulge brackets and they’ve made so much money that they’ve crowded everybody else out of the market,” said Seth Merrin, chief executive officer of brokerage Liquidnet. – Seth, did you know that NYSE has operated a corporate bond exchange for decades? It is open to anyone. Have at it. Many of the 30+ platforms mentioned in this article are trying to remove the dealer from the equation. These platforms are struggling. The better question is: What incentives are these new platforms giving dealers to participate on their platforms? Seth? The article states: “The… Read more »
Voodoo3
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Having no special sympathy or otherwise for Market A, all I can say is that by adding a simple protocol to their offering rather than ‘revolutionising’ the universe they have unlocked liquidity (especially in Europe) and good to them. Fintech guys in this space who are picking up awards for innovation and ‘disruption’ left right and center but haven’t billed a$ or printed a trade are eventually going to be found out and the gullible anti-sellside, anti-broker, anti-middleman naive buyside trader is going to know what he knew before: that in this space (but probably only in this space by… Read more »
Wolfman
Guest
There’s so much here to work with. It seems that the reality is beginning to sink in. e-commerce solutions don’t eliminate the need for all traditional methods of commerce. Hell, Amazon has opened a physical bookstore! Bonds aren’t equities. Some bonds may trade like equities, like benchmark treasuries, but that’s a function of a bond with no risk of default (I hope!) being used as a rate product, not as a credit trade. Anyhow, back to the article. First, Aladdin has not come and gone; it has been enhanced with the tie-up to MarketAxess. It’s understandable that the author may… Read more »
Goose
Guest
Break out the torches and storm the castle! I love all this talk about eliminating the unnecessary dealer/liquidity provider, we don’t need them!! Question, what would the market of the most liquid, regulated price formation market in the world, look like if everyone who is being compensated in some way to provide liquidity (market structure, maker/taker, etc) decided to turn off the switch all at once. How many bids/offers would be left, and how many buy side firms would be willing to post a new one given the new context of the order book? Why did Pipeline and ITG put… Read more »
Merlin
Guest
What I would like to read about is the progress that these alternative platforms are making. How many participants do they REALLY have? How many fully executed documents do they have back? How many firms are executing transactions on their system (and paying for them)? What is their trading volume? Does anyone really care any more how many orders any of them might have? All you have to do is look at poor Bondcube that was hyping their multiple billions of orders days before the plug was pulled. The remaining players are in this same boat and if they aren’t… Read more »
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