ICE bolsters fixed income offering as Virtu offloads BondPoint


By Flora McFarlane.

BondPoint, the electronic fixed income securities trading platform, has become the latest addition to Intercontinental Exchange’s fixed income offering.

With the US$400 million acquisition of BondPoint from high-frequency trading (HFT) firm Virtu, ICE has signalled its intent in expanding in the fixed income market, taking on the service which links over 400 financial services firms to 200,000 live and executable bids and offers.

“We believe adding BondPoint’s capabilities to our data and technology infrastructure will allow us to continue to innovate for our customers as the fixed income markets evolve,” said ICE chairman and CEO, Jeff Sprecher.

The alternative trading system (ATS) enables clients to access centralised liquidity and aims at streamlining pre-and post-trade processes and reporting, integrating with existing client systems.

This comes on the back of ICE’s payment of €275 million euros for a 4.7% stake in Belgium-based settlement house, Euroclear and acquisition of the FICC index business from Bank of America Merrill Lynch Global Research division. The integration of Europe’s biggest settlement house for securities and more than 5000 global FICC indices into ICE’s offering signals intent in the fixed income space from the NYSE-owner.

Low-volatility and heightened competition has seen the trading landscape shift, thanks to the increase in access to data and technology. Some markets have the capacity to support high-frequency trading methods as JPMorgan’s use of Virtu for market access into the US treasury market confirms.

Since the Virtu acquired KCG Holdings for around US$1.4 billion earlier in 2017, which saw BondPoint added to its offerings, Virtu has shut KCG’s European business and slashed headcount by a third in an effort to achieve savings of US$250 million.

Speaking to analysts in its Q2 earnings call, Virtu CEO Doug Cifu said that KCG had provided the firm with quantitative analyst skills that it had previously lacked, and noted that the benefits of the merger would become apparent into next year.

“I think the remainder of this year you’ll see some of it but I do think it will kick in significantly 2018,” he said. “It’s hard to understate how much benefit the Virtu’s side can get. For example, from understanding in a more predictive manner where we think markets are headed. The signal power and the strength, the legacy KCG franchise is really very significant.”

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