Algomi Eyes Bond-Data Revolution
Algomi, the bond information network, is developing pathways to allow access to non-public information as increased electronic trading has led to a demand for standardized data and cross-platform market pricing.
Stu Taylor, co-founder and chief executive of Algomi, told Markets Media there is lot of useful fixed income data which cannot be made public but the firm is developing signposts showing how this information may be accessed.
“We know where the data is and who owns it and will be providing a pathway to access,” Taylor added. “Data in fixed income is going through a small revolution.”
Last month Corvil, which provides data analytics for electronic trading, announced it was expanding into fixed income. David Murray, chief business development officer at Corvil, told Markets Media at the time: “The electronification of fixed income has accelerated and there will continue to be new venues and trading protocols.”
The International Organization of Securities Commissions said in a recent report there are concerns that it will be difficult for technology to achieve rapid increases in efficiencies for locating and pricing securities because of the small number of corporate bonds available to trade, the lack of a centralized liquidity pool and the many different execution preferences.
Iosco said: “To address this, there are a number of current industry initiatives, such as Project Neptune, now Neptune Networks, which initially began in Europe as a means to standardize data and offer cross-platform market pricing representation, and has since expanded to a number of global institutions.”
Neptune Networks, the fixed income market network for pre-trade indications in bonds, announced this month that it has completed connectivity to FlexTrade’s buyside execution management system, FlexTRADER.
Grant Wilson, chief executive of Neptune Networks Ltd, said in a statement: “We are pleased to have our latest EMS connected to Neptune and we look forward to partnering with further providers in the coming weeks and months as we continue to expand access to the platform. Enhancing the flow of electronic pre-trade information has been a focus of market participants for many years.”
MiFID II, the regulations covering European Union financial markets from 2018, introduces requirements for pre-trade transparency and post-trade reporting in bond markets for the first time in the region.
Taylor said: “MiFID II data relates to firm orders but most useful data is softer, such as who actually owns a bond, and is needed before a firm order is made.”
Taylor has relocated to the US to focus on growing Algomi in the region over the next 12 months. Algomi aims to add more US banks and to add to the 80-plus US asset managers already on the network. “We will looking to develop strategic partners in US such as more global exchanges, data companies and other market infrastructure providers,” he added.
Last month exchange operator Euronext expanded its joint venture with Algomi from outside Europe and invested $10m in a minority stake. The global joint venture will involve working closely with regional exchanges and Euronext is working to establish an Automated Trading System in North America, with discussions already under way in Asia Pacific.
Taylor said: “Liquidity challenges in fixed income markets are global by nature. Partnering with an established exchange to provide fixed income traders with a single resource for price discovery, trade execution and settlement on illiquid bonds is a major part of our mission to unlock liquidity.”
Algomi has also announced a partnership with OpenFin, which provides a standardized operating layer for banks’ desktop applications. OpenFin was launched in 2010 and backers include JP Morgan, proprietary trader DRW and Nex Group, which was formerly part of Icap and focusses on electronic markets and post-trade technology. OpenFin now works with 35 of the largest banking institutions and trading platforms and is licensed across more than 100,000 desktops. Using OpenFin, applications can be updated from a common source rather than individually on each machine.
“OpenFin gives us access to a standardized desktop environment in banks to deploy more easily,” added Taylor. “It will allow inter-app communication on the desktop if they have permission to talk to Algomi.”
Usman Khan, chief technology officer at Algomi, said in a statement: “Technology in bond markets is changing faster than ever before and increasingly requires rapid and scalable software deployment across desktop applications. We are now entering a world in which capital markets technology providers can roll out software updates as frequently as technology companies update apps on smartphones.”
The non-profit partnership aims to improve equities market structure.
J.P. Morgan and Aviva Investors are the first to use this new account type.
There are 25 banks participating on the fixed income network.
Investors have the opportunity to create personalized liquidity pools.
Systematic internalisers could handle a sizable proportion of European equity trading.