Liquidnet Primary Markets launches for Europe and US

Dan Barnes

Liquidnet, the block trading specialist which is part of TP ICAP, has launched its hotly anticipated Liquidnet Primary Markets service, a new offering providing a debt capital markets (DCM) workflow for new issue announcements, and a new protocol for trading new issues.

Integrated into the existing Liquidnet Fixed Income trading application, the electronifed DCM workflow provides a dashboard of new issue announcements. Non-trading desk users, such as portfolio managers, analysts and compliance teams, can also access new issue announcements through a web-based portal. The new issue trading protocol enables members to trade new issues in the European investment grade, high yield and emerging bond markets, and in the US, in emerging bond markets.

“Liquidnet Primary Markets is an essential first step in realising our ambition of becoming the first agency broker to achieve the end-to-end electronification of the new issue process,” said Mark Russell, global head of fixed income at Liquidnet. “We have consulted extensively with major market participants to better understand the challenges and build solutions that are truly customised.”

Bond issuance has become a major issue for buy-side trading desks, who are tasked with aggregating the varied ways of issuance that different banks use even in a single bond issue, finding missing data where banks fail to provide it, and feeding a comprehensive picture of what is on offer to portfolio managers who make the decision about whether to invest and at what price. Traders then negotiate with the banks – typically via a very manual process of phones, messaging and chat – to try and get the allocation their PM is looking for.

As this process delivers no additional value to investors or issuers, asset managers have been at pains to understand why the exchange of information and the trading process has not been standardised and electronified. Following a record year of bond issuance in 2021, firms have been keen to this resolved.

Liquidnet’s system is designed to remove manual elements from the process in order to make it more efficient.

Paul Tregidgo, Senior Advisor with Liquidnet said, “Our parsing technology is a critical part of the DCM workflow that creates structured data out of the extensive unstructured deal messages received from syndicate banks, hence significantly accelerating the availability of new issue deal data into order management systems and bringing greater visibility on new issues to both the buy and sell side.”

Russell said, “With our DCM workflow and new issue trading offering, we are addressing the challenges of fragmented new issue dissemination and improving the format of new issue announcements. For our members, this means access to primary and secondary markets through a single Liquidnet application and represents new trading opportunities in a fast moving and rapidly evolving market.”

This new offering will be supported by the firm’s new fixed income member service model, a dedicated trade coverage team providing specialised institutional expertise and insight designed to help members seize trading opportunities. The service has been developed in close consultation with many buy-side firms.

“Our traditional client base and the drivers of the working group are the large asset managers, however, as we speak with more people, we are finding there is something for everyone,” said Russell. Some of our clients are looking at the efficiency we bring to the new issue announcement process while others are excited with the prospect of aggregating and adding transparency to the new issue trading market.”

Liquidnet Primary Markets is the result of over two years of close collaboration and workflow design with in-depth working groups, including a number of buy-side and sell-side firms. Other platforms, such as IHS Markit and sell-side consortium DirectBooks, are also providing new services in this area and interconnectivity between them may be a key point to adoption.

“Liquidnet and others are taking their own unique approach to solve the challenges in this space,” says Russell. “However, I maintain that it is for the industry’s greater good that platforms and services connect with each other to maximize efficiencies and minimize fragmentation. Liquidnet is committed to launching an open and interoperable solution and we’re happy to work with anybody that wants to partner with us. In fact, we have already connected with OMS vendors and other data players to bring today’s solution to life.”

©Markets Media Europe, 2021