As liquidity further diminishes in the corporate bond market, several initiatives have sprung up to encourage the investors that own the vast majority of inventory to submit orders on to exchange-like electronic platforms and provide liquidity to each other through central limit order books. Banks themselves have set up internal crossing networks to match client orders. One of the first to do so was UBS, which launched its Price Improvement Network (UBS PIN-FI) back in 2010. That system and others, such as Goldman Sachs’s GSessions and Morgan Stanley’s BondPool, looked like dealers’ efforts to set up exchange-like bond trading platforms but ones that they themselves still controlled.
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| Stu Taylor, Algomi |
Stu Taylor, who launched UBS PIN-FI as head of matched principal trading in fixed income at UBS, left the bank in 2012 to set up a new company, Algomi. He tells Euromoney: “Because only 1.5% of corporate bonds trade every day, this is an inherently illiquid asset class that sits uncomfortably on exchanges and crossing networks and is not well suited to central limit order books. A better way to tackle the liquidity problem is for banks to do a much better job of capturing, prioritizing and acting on the vast quantities of information flowing through their systems on the much wider universe of bonds that they may not have positions in but that they do have insight about.”
