Liquidnet launches new issue bonds from OMS to banks; interoperability will set competition level

Dan Barnes

Block trading specialist Liquidnet has gone live with a new bond issuance process allowing transmission of buy-side orders in live market deals from order and execution management systems (O/EMS) to participating syndicate banks.

This workflow follows the initial testing that Liquidnet Primary Markets reported earlier this year in collaboration with Invesco Asset Management and Charles River Development (CRD), which was the first O/EMS to facilitate the functionality.

Mark Russell, global head of fixed income at Liquidnet, says: “We are delighted to deliver on our promise; a primary market workflow that brings real efficiency to the live deals in the market. This is only possible because of the incredible relationships we share with the buy and sell side, our deep connectivity and collaborative approach with partners across the ecosystem.”

Competition in the space is fierce, with Bloomberg, DirectBooks and S&P’s InvestorAccess all vying to become the mechanism of choice for investors to use in order to channel primary market information and orders to and from syndicate banks.

Speaking at a recent press conference, Russell said that interoperability between systems, based on an open technology architecture, would determine how many providers might thrive in the market.

“If the industry really does follow open architecture,” he said. “You could easily have upwards of 10 providers in this space, [focused on] communication for regular corporate bonds. Now, if people don’t play nicely, and it’s not open architecture, and then you probably end up with two or three.”

Jonathan Gray, head of primary markets, EMEA, speaking about the live system, says, “We’ve been on this electronification journey alongside the buy side for a number of years now. We made great progress and launched our primary markets solution a year ago. Since then, we enabled investors to send orders via their E/OMS, we partnered with firms involved in this electronification effort and we grew our network of participating syndicate banks substantially. With these live deals, we have now proven that it all works, that we got there.”   

Jason Recordon, head of credit trading, Europe, at Janus Henderson Investors, says “Creating a new issue and communicating primary orders from the O/EMS to the banks leading the deal is the ultimate workflow goal for the buy side. The seamless completion of live deals through the Liquidnet platform is a major step forward.”

Since the launch of the Liquidnet Primary Markets offering, it reports the number of participating banks has grown from 10 to 30+, with coverage on approximately 80% of all European new deal announcements in investment grade; high yield; sovereign, supranational and agency (SSA); covered bonds and global emerging markets.