Neptune Networks, reached $125bn in notional axe/inventory positions on the platform which allows institutional investors to access real-time bond pricing from banks in a standard format, as it looks to develop stronger relationships in the US.
The firm tweeted yesterday: “Record day, broken through $125bn [€114bn] in notional axe/inventory positions on the platform and also broken 25,000 axe/inventory line items!”
Banks previously sent inventory information in multiple formats. In 2014 a group of buyside and sellside institutions began discussing how best to distribute real-time axes in a standard open source format, which has since been approved by the FIX Trading Community’s fixed income sub-committee, and Neptune was launched as a non-profit organization. As a result dealers have been using Neptune as their preferred channel to distribute this data to their clients.
Grant Wilson, Neptune
Grant Wilson, chief executive of Neptune, told Markets Media in an email that since the beginning of this year notional axe positions have increased 56% and inventory positions have gone up by 50% respectively. He expects volumes to rise further as Citibank and Deutsche Bank go live in the coming weeks.
“Neptune continues to grow in 2017 as the model evolves and develops in line with the needs of the market participants, both buy and sellside, around the table, “ added Wilson. “In particular, and driven by client demand we have seen a significant uptick in US dollar liquidity and with Citibank and Deutsche Bank going live in the coming weeks we will only see both the overall liquidity and US dollar liquidity grow.”
He continued that Neptune’s focus for 2017 is to develop stronger relationships in the US market now that the sellside dollar liquidity is relevant and the platform can offer the same real-time, high quality, trusted data to US firms.
“We have always been of the belief that having relevant, strong liquidity to offer is the first step in making the platform relevant in a region and we are now there,” said Wilson.
Last month Nomura and Jefferies were added to Neptune, which took the number of sellside members to 21, with 18 streaming data, and another dealer is expected to be added shortly.
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The indications of interest are used by multiple execution platforms as Neptune was set up to address the issue of sourcing liquidity, rather than execution.
The Desk’s Trading Intentions Survey 2016 said that many of the most successful fixed income models are not those which aggregate actionable liquidity. The survey said: “The services provided by Algomi, Neptune and B2SCAN all focus on the use of information to support where to trade rather than offering a venue to introduce the platforms as with request for quote systems, or any auction or order book.”
Sourcing liquidity in the bond market has become more important as dealers have pulled back from market-making and resulted in an increase in all-to-all trading. An all-to-all model allows multiple parties in a network to come together to trade rather than the traditional model of only banks supplying liquidity to the buyside.
Last month Tradeweb Europe said it will be introducing all-to-all trading on its credit platform in the region in second half of this year. The electronic fixed income, derivatives and exchange-traded fund venue had already announced the launch of all-to-all trading on the US credit platform.
Rival MarketAxess reported last month that volume on Open Trading, its all-to-all market for corporate bonds, rose to a record $59bn in the first quarter, with average daily volume up 56% with the first quarter of last year. Open Trading lets investment managers, broker-dealers at investment banks and other market participants trade directly with one another electronically on an anonymous basis.
Rick McVey, chief executive of MarketAxess. said in the results call: "Open Trading adoption continues to accelerate as clients around the world embrace it as the preferred all-to-all liquidity solution in the global credit markets.”
McVey added that Open Trading price responses more than doubled in the first quarter as the number of firms providing liquidity rose to 672 from 527 a year earlier. Open Trading volume accounted for the 34% of high-yield trading, 15% of high-grade bond trading, and 11% of emerging market bonds.
MarketAxess estimated that firms accessing Open Trading liquidity in the first quarter saved about $25m in transaction costs.
