Bloomberg announced the impending launch of Tradeable Trackers, a suite of tradeable indices based on the Bloomberg Fixed Income Indices (“Bloomberg Indices”).
Unlike traditional end-of-day indices, these rules-based indices have intraday pricing available, minimizing tracking error while enhancing transparency and price discovery. The Tradeable Trackers will also support innovation in the fixed income derivatives market via the development of standardized and listed products. These new indices will expand Bloomberg’s comprehensive fixed income and derivatives offerings, and will provide clients with the ability to easily gain exposure to these markets.
Recent SIFMA research shows that outstanding US corporate bond debt grew 26.3% from 2017 to 2021, while FINRA reported that average daily volume (ADV) in the secondary markets only grew 12.7% over the same period. Tradeable Trackers will provide market participants with the ability to hedge their portfolios with capital efficiency while deepening the liquidity in the secondary fixed income markets.
"As the fixed income markets evolve, we expect a number of liquid offerings to be made available to investors," said Steve Berkley CEO, Bloomberg Index Services Ltd. "The Tradable Trackers take this concept one step further by providing both liquidity and a targeted market performance as measured by the Bloomberg Indices, the most widely used fixed income indices in the world."
The first Tradeable Tracker index, due to be available in Q4 2022, will consist of 200 liquid bonds and will measure the performance of the Bloomberg US Corporate Bond Index as well as related spreads.
Pricing will be provided by BVAL, Bloomberg’s evaluated pricing service, using IBVAL, BVAL’s intraday pricing product, which has been enhanced to bridge the gap between trading and index pricing. BVAL continuously evolves to meet client needs while providing high-quality data, a sophisticated methodology, and the transparency of its valuation process and data inputs. This will enable greater liquidity in products based on the Tradable Trackers with higher correlation to these benchmark indices. Bloomberg Terminal users will also be able to identify trading opportunities using Bloomberg's Index Relative Value analytics (IRV).
Tradeable Trackers will be available for use in conjunction with Bloomberg’s electronic trading solutions, enabling market participants to improve the accuracy and quality of their risk management.
Source: Bloomberg