Euronext and Algomi to launch new trading facility to improve liquidity in pan-european corporate bond trading

Under a ten year strategic partnership agreement, Euronext and Algomi will form a Joint Venture Special Purpose Vehicle (“JV SPV”), capitalised by Euronext, with technology supplied by Algomi, to improve liquidity in pan-European corporate bond trading

The JV SPV will license Algomi’s leading edge technology on a pan-European exclusive basis [1]   to a newly established multilateral trading facility (MTF) owned and operated by Euronext, pending relevant regulatory approvals

By linking together Euronext, the banks and investors in a collaborative network, Euronext becomes a centralized market place for pan-European corporate bond trading

Multiple streams of synergies in technology and market data will be explored jointly with Algomi through the JV SPV

The JV SPV combines Algomi’s award winning and innovative technology with Euronext’s clients network, reputation, neutrality and industry positioning

Amsterdam, Brussels, Lisbon, London and Paris – 3 November 2016– Euronext today announced a 10 year partnership with leading Fixed Income technology provider Algomi to create a long-term joint-venture. This JV, capitalised by Euronext for US$ 2.3 million, will deploy Algomi’s award winning technology to a new MTF owned and operated by Euronext. Dealers will be able to access the trading interface either directly through their existing Algomi technology or through their stand-alone systems. The platform will use algorithmic smart matching processes to create an auction between dealers to improve liquidity and search for best execution.

Strategic Rationale
Local and global bond markets comprise c.US$87 trillion[2] in market value. The majority of trades, by value, are still completed on the phone which results in an opaque and fragmented market based on imperfect information.

There is limited data on buyers and sellers which results in low liquidity. Investors in these markets continue to struggle to find the right trading counter-party at the right time. This unique solution will link Euronext, the banks and investors in a collaborative network which creates a centralised market place. It will turn disparate data into relevant and structured information and increase trade opportunities in the pan-European corporate bond market. 

This solution completes Algomi’s Honeycomb bond network, that already connects asset managers and their dealers, by bringing the dealers together for the first time with the strength of the regulated federal model of Euronext.

Paul Humphrey, Head of Fixed-income, Rates & FX at Euronext, commented:“Banks are under increasing pressure to de-risk balance sheet and hold less bond inventory. This platform will create huge network effects that will assist multi-located global sales and trading teams to identify the most profitable trades from the “market noise”.

Mark Ledwards, Head of Exchange & Data Solutions, Algomi: “Existing data from our Honeycomb network suggests that over 40% of less liquid indications of interest could benefit from being matched on the Euronext platform.”

Stu Taylor, Co-Founder and CEO Algomi:“We are delighted to be working with such a significant market player as Euronext, who have already proven themselves to be highly nimble and forward thinking in this field. The long term relationship is evidence of the commitment by both sides to improving the European corporate bond market.”

Stéphane Boujnah, CEO of Euronext: “The creation of this platform will ultimately diversify Euronext’s offering, with further key synergies in technology and market data to be explored jointly with Algomi. This initiative, alongside our broader ambitions in FICC, fits with Euronext’s “Agility for Growth” strategy of capturing innovative opportunities arising from the market environment, accelerating growth through strategic partnerships, enhancing agility and strengthening its core offering to finance the real economy.

 

[1]Excluding Switzerland
[2]Source: Bank of International Settlement Quarterly Review, December 2015

About Algomi
Algomi connects fixed income professionals, empowering them to make better trading relationships, in the ever-changing landscape of capital, leverage and liquidity requirements. By harnessing the relationships between salespeople, traders and their clients, Algomi software greatly increases the opportunities and velocity in large and illiquid voice trades.
Algomi was founded in 2012 by Stu Taylor (Former Global Head of Matched Principal Trading and creator of PIN-FI at UBS), Usman Khan and Robert Howes (Founders of CAPXD), and Michael Schmidt (Former Head of European Credit Trading and IB Board Member at UBS). Algomi is backed by investment from Lakestar, and an exceptional panel of Strategic Advisors. Algomi has 140 employees with offices in New York, London and Hong Kong.

 

About Euronext
Euronext is the leading pan-European exchange in the Eurozone with nearly 1,300 listed issuers worth close to €3.6 trillion in market capitalisation as of end September 2017, an unmatched blue chip franchise consisting of 24 issuers in the Morningstar® Eurozone 50 Index℠ and a strong diverse domestic and international client base.  Euronext operates regulated and transparent equity and derivatives markets. Its total product offering includes Equities, Exchange Traded Funds, Warrants & Certificates, Bonds, Derivatives, Commodities and Indices. Euronext also leverages its expertise in running markets by providing technology and managed services to third parties. In addition to its main regulated market, Euronext also operates Euronext GrowthTM (formerly known as Alternext) and Euronext AccessTM (formerly known as the Free Market). For the latest news, find us on Twitter  (www.twitter.com/euronext) and LinkedIn (www.linkedin.com/company/euronext).

Disclaimer
This press release is for information purposes only and is not a recommendation to engage in investment activities. This press release is provided “as is” without representation or warranty of any kind. While all reasonable care has been taken to ensure the accuracy of the content, Euronext does not guarantee its accuracy or completeness. Euronext will not be held liable for any loss or damages of any nature ensuing from using, trusting or acting on information provided. No information set out or referred to in this publication may be regarded as creating any right or obligation. The creation of rights and obligations in respect of financial products that are traded on the exchanges operated by Euronext’s subsidiaries shall depend solely on the applicable rules of the market operator. All proprietary rights and interest in or connected with this publication shall vest in Euronext.

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