Euronext and Algomi Partner in New Trading Facility to Improve Liquidity

Algorithmic processes will be used to create an auction between dealers to improve liquidity and search for best execution.

Euronext, Europe’s largest exchange, today announced a 10-year partnership with Fixed Income technology provider, Algomi, to create a long-term joint-venture.

The JV, capitalised by Euronext for $2.3 million, will deploy Algomi’s technology to a new multilateral trading facility (MTF) owned and operated by Euronext. Dealers will be able to access the trading interface either directly via their existing Algomi technology or through their stand-alone systems.

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Rationale

The strategic rationale behind the JV is based on the the local and global bond markets which comprise US$87 trillion in market value. The majority of these trades 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, while investors in these markets still struggle to find the right trading counter-party at the right time.

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Solution

The solution will link Euronext, banks and investors in a collaborative network which creates a centralised marketplace, turning disparate data into relevant and structured information while increasing trade opportunities in the pan-European corporate bond market.  

The solution also completes Algomi’s Honeycomb bond network which 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.

With banks facing increased pressure to de-risk balance sheet and hold less bond inventory, the platform will create substantial network effects that will assist multi-located global sales and trading teams pinpoint the most profitable trades.

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.”

Stu Taylor, co-founder and CEO of Algomi, added: “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.”

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