SIX Swiss Exchange prepares to launch corporate bonds platform
SIX Swiss Exchange is to launch a new trading platform for corporate bonds, which it says will provide a better way of trading large blocks of less liquid issues. The new platform is due to launch in the first half of 2015.
Designed for trades of at least two million euros, GBP or US dollar, the platform is being described as a multilateral liquidity pool for large orders in corporate bonds. The idea is to eliminate the disadvantages of off-exchange trading, such as lack of liquidity, small trade sizes, time-consuming price negotiations and the worry that prices could be negatively influenced by premature disclosure.
The bond market has become increasingly fragmented in recent years, as new players have entered the market and an uneven processes of electronification has taken place. A significant portion of trading activity still takes place off-exchange; the new platform aims to take advantage of the perception that the entire market is moving to converge with other asset classes such as equities – a process that is also being driven by regulation making OTC trading more expensive.
“With the new electronic trading platform for corporate bonds, we are creating a regulated market that will benefit not only market professionals but also provide greater efficiency for their clients, in other words pension funds and asset managers,” said Christian Katz, division chief executive at the Swiss Exchange. “Trading participants in this electronic platform will be able to transact large orders of bonds simply and efficiently via the new liquidity pool and exchange infrastructure. This not only lowers transaction costs but also improves risk management.”