Now the buy side can sell bonds to the Fed – via MarketAxess

Dan Barnes
Rick McVey, CEO, MarketAxess

Bond market operator, MarketAxess, has been designated as an Eligible Seller for the central bank’s Secondary Market Corporate Credit Facility (SMCCF) by the Federal Reserve Bank of New York.

The SMCCF supports market liquidity for corporate debt by purchasing individual corporate bonds of Eligible Issuers and exchange-traded funds (ETFs) in the secondary market. Eligible Sellers are the designated entities that will transact with the SMCCF as it carries out its programme.

Whereas many of the designated sellers are sell-side dealers, MarketAxess offers all-to-all trading between buy-side and sell-side firms via its Open Trading protocol. All-to-all trading was seen as a useful source of liquidity during the recent period of credit market stress in Q1 and Q2.

With its Eligible Seller designation, MarketAxess can allow investors and broker-dealers the opportunity to respond directly and anonymously to the Fed’s requests to purchase bonds via Open Trading.

“MarketAxess is honoured to participate in this important program to support the recovery of the American economy,” said Rick McVey, chairman and CEO of MarketAxess. “Ensuring the resilience of fixed-income markets and maintaining the strength of the secondary market are critical to restoring the health of American business, rebuilding employment opportunities and helping communities address the impact of the Covid-19 outbreak.”

Although actual bond-buying levels have been relatively low, managed by BlackRock Financial Markets Advisory as investment manager for the SMCCF, the sentiment created by the Fed’s support for credit is seen as a driver of liquidity in the market.

©The DESK 2020