Electronic income

LSEG invests in BondCliQ to expand its fixed income data

The London Stock Exchange Group and buy-side institutions have conducted fundraising in BondCliQ, which provides a consolidated listing system in the opaque and fragmented corporate bond market.

BondCliQ said in a statement that it is holding an initial close on its Series A financing, led by LSEG, Aflac Ventures and SEI. In addition, Vanguard is committed as a strategic partner to support improvements in the structure of the corporate bond market.

Jon George, LSEG

Jon George, Global Head of FICC Trading Solutions at LSEG, told Markets Media: “From a client’s perspective, the fixed income industry is an incredibly opaque and fragmented market. This is a huge problem for clients when looking for information on specific risks or pre-trade information.

As a result, customers are looking for an industry-wide solution given this set of problems and the challenge of measuring transaction cost analysis.

George added that BondCliQ centralizes pre-trade liquidity and bundles offers and offers to provide investors with better quality pre-trade data. He said: “The governance model includes the dealers and this partnership is important on which we must build. “

LSEG and BondCliQ also signed terms and conditions to collaborate on new product opportunities, including making BondCliQ proprietary data available through LSEG to improve pre-trade pricing for corporate bonds.

BondCliQ provides buy-side users access to centralized corporate bond quote data from the more than 50,000 quotes BondCliQ receives daily from over 40 brokers. This quote data, combined with spread enriched pricing data, helps credit traders better analyze the market and optimize their trading strategies.

Chris White, managing director of BondCliQ, told Markets Media that a big differentiator for the company is that it obtains data directly from resellers who have provided it voluntarily in exchange for incentives, including access. to price data. “No other initiative in the corporate bond market gives brokers access to the price data they collectively generate,” he said.

An incentive for resellers is a share of revenue from sales of BondCliQ price data.

“When we sell price data to vendors or to the buy side, a significant percentage of revenue is reallocated to dealers based on the quality and extent of their contributions to the data,” White added. “Think of us as the iTunes of resellers. “

Other incentives are prize distribution and business intelligence. BondCliQ has built proprietary technology to integrate with any order and execution management system and has created an algorithm that comparatively ranks brokers based on their ability to maintain their share against other brokers doing a market on this bond.

“For the first time, brokers are able to understand their performance in terms of consistency, competitiveness and liquidity relative to everyone else at the individual bond level,” White said. “Dealers have a constant need to renew their inventory, but without a more in-depth understanding of how to improve their chances of getting an order flow that becomes very difficult. “

Data is essential

BondCliQ was founded on the premise that a key part of the architecture required for modernizing any market is a centralized pricing solution. The consolidated listing platform does not allow market makers to prioritize prices for different clients based on their name or size. However, dealers can check whether their identity or size is presented to some customers.

Chris White, BondCliQ

“Our objective, market-determined pricing means that clients see the same pricing information in the same bond at the same time,” White added. “Data has been around for a long time, but no one has ever organized it. “

Once a source of price data is readily available, reliable, and constantly improving in quality, market makers automate more prices and the buy side is able to automate more order flow. which allows electronic trading to take off according to White.

“Our consolidated quote architecture is uniquely designed to centralize pricing so that customer order flow is based on a dealer’s pricing competence, which directly leads to better business performance,” said he declared.

For example, in the past 12 months, BondCliQ has provided over 1.9 million active bond quotes that have not been traded for a day.

“I think we have positioned electronic trading as the solution to the liquidity problem, but this problem can only be solved by using data that allows a large and healthy group of market makers to feel they can take steps. informed decisions in a market, ”added White. “You don’t solve the liquidity problem just by making the markets trade faster. “

Growth strategy

White continued that BondCliQ does not currently receive from the top five credit brokers, but fundraising is starting to address this issue.

“The top five dealers have said they need to see the definitive engagement of key customers before participating and fundraising includes Aflac, Vanguard and SEI investments,” he added. “I think the buy-side institutions in the bond markets have never invested in a platform or a solution at this stage of its development. We are therefore quite proud of the uniqueness of this agreement.

BondCliQ aims to provide global credit securities pricing data and LSEG and Refinitiv have established relationships and sales teams in Continental Europe and Asia.

“One of the great advantages of working with a lead investor like LSEG and Refinitiv is their geographic positioning,” White said. “Our strategy is to build a beachhead using US corporate bonds and then grow.”

According to George, LSEG has strong relationships with sellers, buyers and electronically through its desktop variants and API network.

“In our Data and Analytics division, we have at least 40,000 customers and 400,000 end users, so we will be looking to work with BondCliQ on distribution and new product capabilities,” added George. “We are very interested in solving customer problems as a player in the solution delivery infrastructure. “

George described the trend for electronic fixed income trading as becoming ‘turbocharged’ since Covid 19.

“The key for clients in fragmented interest rate markets is to reduce the friction for executing transactions, to reduce manual workflows so the process is as automated as possible, to have data where it lives. your traders executing and having interoperability, ”he added.

In 2022, BondCliQ aims to have full saturation among dealers and ensure that all contributors have access to real-time price information on screen to help them avoid errors, establish accurate markets and assess properly liquidity. Another goal is to be integrated into all the major order management systems that the buy side uses in fixed income securities.

White said, “All liquidity in the market will be increased as there is a community of knowledgeable market makers in the institutional market.”