Euronext is to invest $2.3 million to create a joint venture company with fixed income technology outfit Algomi aimed at improving liquidity discovery in pan-European corporate bond trading.
The JV will license Algomi’s technology on a pan-European exclusive basis to a newly established multilateral trading facility (MTF) owned and operated by Euronext.
Founded in 2012 by Stu Taylor, Robert Howes and Usman Khan, who previously worked on projects including UBS PIN network, and Deutsche Bank Autobahn, London-based Algomi has over 160 buyside and 15 banks signed up to its Honeycomb Network.
The network helps banks create a virtual balance sheet based on actual bond data – including trade information, enquiries, and holdings – and lets buyside firms see this validated virtual balance sheet at the banks.
Under the agreement with Euronext, dealers will be able to access the trading interface either directly through their existing Algomi implementation or through their stand-alone systems. The platform will use algorithmic smart matching processes to create an auction between dealers to improve liquidity and search for best execution.
Euronext says the JV will link banks and investors in a collaborative network which creates a centralised market place, improving liquidity matching in an opaque market where most deals are still completed on the telephone.
Paul Humphrey, head of fixed-income, rates & FX at Euronext, comments: “Banks are under increasing pressure to de-risk balance sheet and hold less bond inventory. This platform will create huge network effects that will assist multi-located global sales and trading teams to identify the most profitable trades from the “market noise”.