SIX Swiss Exchange has launched a new trading platform for corporate bonds, offering more efficient trading of large blocks in less liquid issues.
Developed in cooperation with sell-side market participants, the platform is designed to lead to a multilateral liquid pool for trading of large order corporate bonds.
This should lessen some of the disadvantages of off-exchange trading, including inefficiency, insufficient liquidity, small trade sizes, time-consuming negotiations and premature disclosure that negatively affects pricing.
On the new platform, market participants will be brought together to ensure a regulated market and protection against leaks. Pricing and volumes will be agreed electronically and execution will be completed without negative market impact.
The system should be particularly effective for large, less liquid corporate bonds and for trades of 2 million or more euros, British pounds or US dollars.
Christian Katz, division CEO Swiss Exchange, said: "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.”
“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."
The platform is part of SIX Swiss Exchange’s ‘over the exchange’ initiative, which is designed to offer new services to its client base and provide an alternative to a fragmented and inefficient bond trading arena.
It will be domiciled in Switzerland and regulated by the Swiss Financial Market Supervisory Autority. The exchange chose Algomi Ltd as its technology partner, and SIX Exchange Regulation will be responsible for market supervision.
