LedgerEdge, the distributed ledger ecosystem for trading bonds has gone live with a regulated corporate bond trading platform built using distributed ledger technology (DLT), the technology underpinning blockchain ecosystems and digital markets. LedgerEdge is powered by R3’s Corda, a permissioned peer-to-peer distributed platform that supports applications designed to foster and deliver digital trust between parties in regulated markets.
LedgerEdge’s digital market is a decentralised system that is fully regulated by the Financial Conduct Authority as a multilateral trading facility (MTF). LedgerEdge has been built in collaboration with the global banks, asset managers, and market makers. The system is operational with 45 firms in the UK MTF and 70 globally that are either trading on the platform or in the onboarding process. These include seven out of the 10 largest sell-side dealers as well as more than 30 large asset managers.
Trading has launched with liquidity growing as more participants join the ecosystem. LedgerEdge has received positive feedback from the market – 30% of traders in The DESK’s Trading Intentions Survey 2022 said they intend to use LedgerEdge to execute corporate bond trades this year while 33% of traders said they plan to use LedgerEdge for pre-trade data.
LedgerEdge built an ecosystem using distributed ledger technology to try and modernise institutional-grade trading services and protocols in the US$41 trillion global corporate bond market, much of which is still conducted by phone.
It is designed to allow traders to keep full control over their data and use smart contracts to reveal only certain information, such as order and pricing, under specific conditions. The ability to share data using conditional, bilateral, and anonymous smart protocols could increase the amount of pre-trade data available and therefore improve liquidity transparency. Smart contract orders also potentially help reduce market impact as bid and inventory data only reach traders with compatible bids.
“The first fully regulated bond trading platform built on distributed ledger technology is an important milestone for the industry,” said David Nicol, CEO and co-founder, LedgerEdge. “Credit markets are on the cusp of a digital transformation that has come to other asset classes, and we are excited to be at the forefront in this important market. Client feedback has been an instrumental part of how we built our ecosystem, and I want to thank key participants for being integral to our development. I look forward to continuing that collaborative approach as volume grows and we continue to develop the product. We are bringing a new, modern ecosystem that emphasizes control and ease of execution to a historically illiquid market.”
“Today’s announcement marks a momentous step for LedgerEdge,” said David Rutter, co-founder, LedgerEdge. “This is the culmination of pioneering ideas, work, and important client engagement. Our ambitions have now been realized as we bring a next-generation platform to market that fundamentally solves the challenges of locating and promoting liquidity and data ownership. The decentralised system we built gives us the opportunity to rewrite the architecture in the bond market, and corporate bonds are just the beginning.”
©Markets Media Europe, 2022
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