BlackRock created a stir by announcing it would bypass Wall Street and start matching fixed-income trades — when the firm had a buyer and a seller not only in-house but also among clients of its BlackRock Solutions technology. Now all money managers have the same idea, and new players have stepped up to meet their needs. This month New York–based Vega-Chi launches an electronic market for high-yield bonds where institutional investors can trade directly with each other. “Banks have changed their commercial models, and the liquidity isn’t there,” says CEO Constantinos Antoniades. “At the same time, the assets under management at the buy side have increased. We bridge the gap.”
New York–based Bonds.com offers access to liquidity through a centralized, web-based market for fixed-income products, CEO Thomas Thees explains. Bonds.com’s sweet spot is transactions up to $5 million; Thees thinks bigger trades will stay with the broker-dealers. “The market is changing,” he notes. “Dealer-side balance sheets are down 82 percent in five years, while clients’ assets are five times greater. How do you solve for that?”
