Flow Traders will become the first non-bank sell-side participant in Europe on Neptune Networks, the fixed income platform for disseminating real-time axe data.
Byron Cooper-Fogarty, COO at Neptune Networks, said: “In the US we have had some broker dealers join the platform, In Europe Flow Traders are the first non-bank sell-side participant.”
This year Neptune added three new sell-side participants, including Flow Traders, and grew to more than 80 global buy-side firms with almost $50 trillion in assets under management.
Cooper-Fogarty continued that over the last two years there has been more demand from the buy side to add names like Flow Traders, as those types of market makers have become more active in credit.
Kevin McPartland, head of market structure and technology research at consultancy Coalition Greenwich, said in a recent blog that the corporate bond market has seen electronic liquidity jump in amount and quality over the past several years, as non-bank liquidity providers have entered the scene.
Ramon Balje, Head of Fixed Income EMEA at Flow Traders, said, in a statement: “The corporate bond market continues to transform and innovate as a result of technology advancements and the availability of higher quality data. Flow Traders has been a longstanding supporter of this innovation and the transparency, cost reduction and efficiency gains it brings to the market.”
Cooper-Fogarty said another change over the last two years is the way that Neptune’s axes data is being used as it has expanded to become part of the decision making process on automated execution of tiny tickets.
“This makes perfect sense as the real-time axes we carry give you a far better picture of who is genuinely active in that bond,” he added.
In addition, larger buy-side firms are adopting a strategy around data and getting connectivity in place into their core workflow tools in both trading and portfolio management. Neptune’s data is increasingly being used by portfolio managers and Cooper-Fogarty thinks that will continue to grow.
Another trend is the proliferation of portfolio trading, ETFs and algos.
“In our core credit product, a lot more of our market makers are sending through algo axes and we are starting to see big sizes coming through,” said Cooper-Fogarty.
Flow Traders will distribute axes via Neptune on investment grade, high yield corporate credit and emerging markets sovereign bonds with an initial focus on 5,000 ISINs in euro-denominated corporate credit and dollar-denominated emerging markets sovereign bonds.
Cooper-Fogarty said: “European and US credit have been our core asset class from the start. Emerging markets have been a real focus for us in 2021 and will continue to be a big part of what we want to do going forward.”
He added that Neptune has pretty ambitious plans for 2022 in terms of continuing to grow asset classes, links to execution and pushing further into Asia Pacific. In the US municipal bonds and structured products are going to be a big focus next year.
By the end of 2022 Neptune would ideally like to have links to execution with select partners, who could be different for different geographies.
“We want to continue to grow the client base, have the first stages of the expansion in Asia Pacific in hard currency and in US rates,” said Cooper-Fogarty. “We would like to have kicked things off in local currency emerging markets and be well down the path in US municipal bonds.”
©Markets Media Europe, 2021
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