TradingScreen Develops Corporate Bonds MTF
Execution management system (EMS) provider TradingScreen plans to launch Galaxy, a multilateral trading facility (MTF) for European corporate bonds, by the end of the year, according to vendor officials.
Following recommendations from the Cassiopeia Committee, a group of representatives from major European trading venues and financial firms, TradingScreen is developing Galaxy to bring transparency and efficiency to European corporate bond trading, explains Michel Croz, head of the TradeEMS product for the EMEA regions at TradingScreen.
"We have a converging interest of all players involved to address systematic liquidity issues, such as the cost of the secondary market, market-making, and the increasing transactional costs," says Croz. "Galaxy's objective is to rally the participants around a model that dramatically improves the current system and brings benefits to all."
Galaxy will be open to any regulated institutional participant authorized to trade corporate securities in Europe, according to Croz. "TradingScreen will provide the distribution through its TradeEMS and [the Galaxy MTF] will be connected to other platforms and order management systems in the market."
Trades on the new venue will be cleared by LCH.Clearnet, which has links to various international central security depositories (ICSDs) and European national central security depositories (CSDs) for settlement and delivery, according to officials.
The Cassiopeia Committee launched three sub-groups at the beginning of 2010 to focus on order matching, pre- and post-execution reporting, and governance, to compile a list of features expected in a secondary bond market. According to the groups, potential markets should be MTFs that are subject to provisions on market abuse, backed by clearinghouses with a central counterparty guaranteeing the successful completion of trades. They also should apply transparency rules and rules for reporting to regulators, and for internal controls and issuer information purposes.
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