AB, Algomi Partner on Analytics
AllianceBernstein Selects Algomi as Partner to Acquire ALFA Fixed Income Liquidity and Analytics Tool
T. Rowe Price, BlueBay Asset Management, Brown Brothers Harriman and AllianceBernstein, to be among early adopters of Algomi ALFA
Initiative will deliver bond markets with an aggregated picture of liquidity signals across multiple electronic venues, message platforms and direct dealer inventories
NEW YORK (May 16, 2017) – Algomi, the network company providing information-matching solutions for the optimization of fixed income liquidity, today announced that the company will acquire and distribute the award-winning ALFA product created and developed by AllianceBernstein (AB).
ALFA (Automated Liquidity Filtering & Analytics) was developed as an in-house liquidity tool by AB. It provides cross-market information on liquidity and trade intent in order to give the buy-side a real-time view of the entire bond market including government bonds, investment grade, high yield, emerging market, municipal debt, and structured credit.
AB selected Algomi in a competitive search process to acquire and become the sole marketer of the product, now called Algomi ALFA. It will be sold to fund managers across the buy-side, allowing them to consume data from electronic venues, messaging platforms and direct dealer inventory feeds. Algomi’s focus on data technology solutions remains unchanged and was a key factor in AB’s selection process, further emphasizing Algomi’s agnostic stance on mode of execution channel. .
To protect individual client data integrity and ownership, ALFA clients will procure and own their own hardware via an approved cloud provider and Algomi will then install and deploy the ALFA software thereby maintaining Algomi’s role as a pure software vendor. As with all Algomi solutions, clients own their data and Algomi has no access to the data.
Algomi has acquired the intellectual property and technology behind ALFA as well as the brand name. AllianceBernstein is also taking an undisclosed minority stake in the company and a seat on the Algomi board of directors.
ALFA solves several problems in today’s fragmented fixed income markets. The platform offers benefits to the buy-side, including:
- Aggregating the entire market landscape into ONE screen, to alert buy-side users of liquidity opportunities.
- More informed decision making through capturing a range of “Liquidity Signals”
- Helping traders determine not only whether to buy or sell a security, but also when and what mode of execution.
- Speed & Efficiency – cut the required time to fund a new trading mandate from weeks to days, and allowing more rapid repositioning of portfolios.
- Optimization of bond selection – can be better timed as a result of signals obtained through ALFA
- Providing evidence for Best Execution and TCA – enhanced process through better data, and proof that trade was timed correctly
Algomi ALFA will be hosted on an approved cloud with secure and unique instances for each customer. This is consistent with the delivery approach of Algomi’s sell-side Big-Data Information Processing Engine, known as Synchronicity, which allows them to develop a data relationship with clients via API or GUI based on bank preference.
Stu Taylor, Algomi CEO said, “The buy-side community has to navigate an increasing variety of liquidity channels yet preserve their trading and data integrity. They must remain instantly and continuously aware of relevant trading opportunities in the market to achieve Best Execution. Uniquely, Algomi ALFA acts as a conduit for all market participants including electronic platforms, data providers, sell-side firms and the buy-side in a way that enriches the interaction between these participants. Market timing is everything.”
Jim Switzer, Head of Credit Trading at AllianceBernstein said: “The idea to take ALFA to market was fostered by an internal, firm-wide initiative we launched several years ago to spur technological innovation called AB Labs. Our fixed income team recognized early that the industry landscape was changing and that those who could effectively address issues such as lack of liquidity, price transparency, and efficiency, would have a competitive advantage. By leveraging the resources across the firm, we were able to create a technology that enables investors to play a more active role in generating liquidity in the marketplace – making them ‘price makers’ rather than simply ‘price takers.’ We are confident that Algomi will take ALFA to even higher echelons and bring the entire buy-side together on a world class platform.”
Rich Colucci, Head of Americas at Algomi said, “The initial buy-side excitement we have received across the US, Europe and Asia has been overwhelming and we are now entering contract negotiations with a number of firms. In addition to execution traders, portfolio managers and quants, we have had strong interest from compliance professionals, which further emphasizes the power of having comprehensive and time-stamped information at your fingertips. This enables efficiency and scale and is conducive to cost savings and greater alpha generation. We’re excited to partner with AllianceBernstein to take this product out to the wider market.”
Alex Sedgwick, Head of Fixed Income Market Structure & Electronic Trading at T. Rowe Price said: “A perfect storm of challenges is driving the industry towards new technology in fixed income markets. A low rate environment, data fragmentation and increased regulatory focus are all leading to greater demand for more comprehensive and aggregated pre-trade information across markets. Algomi ALFA will give our fixed income traders and portfolio managers a consolidated view of corporate bond market activity, enabling them to spot relative value opportunities, and further support our efforts to deliver best execution to clients. We look forward to integrating Algomi ALFA in the near future.”
Usman Khan, CTO of Algomi said “Algomi ALFA is integrated with Algomi’s global enterprise secure infrastructure-as-code technology stack, to deliver value added real-time content to all Honeycomb participants. This SAAS (Software As A Service) based platform will utilise the latest application distribution initiatives from OpenFin, through which future Algomi apps will be delivered. All Honeycomb Sell-Side firms on the existing Algomi technology stack will be automatically connected to Algomi ALFA, enriching their existing bilateral relationships. We look forward to helping all our clients benefit from this initiative.”
John Orrock, Senior Trader and Trade Operations Lead of BlueBay Asset Management said “The way in which fixed income markets operate is changing as the buy-side continues to take a more active role in providing liquidity. What is interesting about Algomi ALFA is its ability to aggregate price information across the breadth of the market, including new sources of liquidity drawn from message platforms, e-venues and bank inventories. Such features can increase the likelihood of a successful trade and we think this has the potential to be a ‘game changer’ for price discovery in bond markets.”
Andrew Hofer, Head of Taxable Fixed Income at Brown Brothers Harriman said: “What attracts us to Algomi ALFA is not just an aggregated view of liquidity on one screen, but its ability to deliver relevant information about activity and interest in the specific ideas we are targeting. Bringing together data from across the market and complementing this with smart analytics will greatly improve the ability for market participants to transact efficiently and at the best price.”
Algomi was advised by Sandler O’Neill & Partners and JAG Shaw Baker on this transaction.
# # #
Notes to Editors
Algomi connects fixed income professionals, empowering them to make better trading relationships, in the ever-changing landscape of capital, leverage and liquidity requirements. By harnessing the relationships between Fixed Income salespeople, traders and their clients, the Algomi Honeycomb suite of scalable software greatly increases the opportunities and velocity in large and illiquid trades between banks and buy side investors.
For banks, Algomi creates a real-time internal network of salespeople and traders, using their own data, external aggregators and other sources; enabling banks to identify the best trade opportunities and to generate efficient collaboration between traders, salespeople and a discreet dynamic connection to their universe of investor clients and interbank parties.
For portfolio managers, execution desks and compliance teams, Algomi Honeycomb turns complex data systems into actionable knowledge, helping investors trade with increased speed and success. Honeycomb sets a new standard in the way dealers market to the buy-side, recognizing that their value is now derived from their distribution network not their balance sheet. This provides the buy side firm with a unique and powerful display of information on their portfolio. Honeycomb provides the data and market insight vital to selecting the right banks and the right time to trade. The investor is able to deal in size, seek best execution, and remain discreet in the market.
Currently Algomi has over 250 buy-side and 19 banks signed up to their Honeycomb and Synchronicity products. Algomi has 140 employees with offices in New York, London and Hong Kong.
Algomi was founded in 2012 by Stu Taylor (Former Global Head of Matched Principal Trading and creator of PIN-FI at UBS), Usman Khan and Robert Howes (Founders of CAPXD), and Michael Schmidt (Former Head of European Credit Trading and IB Board Member at UBS). Algomi is backed by investment from Lakestar and Euronext, and have an exceptional panel of Strategic Advisors.
AB is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals and private wealth clients in major world markets.
As of March 31, 2017, AB Holding owned approximately 35.9% of the issued and outstanding AB Units and AXA, a worldwide leader in financial protection, owned an approximate 63.8% economic interest in AB.
Additional information about AB may be found on our website, www.abglobal.com.
Market consultancy names top fixed income brokers by share.
Fixed income platform operator cites innovation and regulation as recent drivers.
The acquisition of the Irish Stock Exchange is due to close next month.
Investors plowed $78 billion into ETFs in January.
The tool targets FINRA's markup disclosure rule, which goes live on May 14.