Algomi Forges Ahead
Algomi is looking to develop a voice enabled capability, as the network for matching bond buyers and sellers said its platform could possibly be developed for difficult trades in other asset classes.
Algomi was launched in 2012 to build a social network for the corporate bond market and recently celebrated its three-year anniversary. When Algomi started it built internal networks for banks to connect together staff who could help transact less liquid corporate bonds but the firm has since added asset managers to its Honeycomb network so they can easily and quickly find the best bank to execute large trades.
Stu Taylor, chief executive of Algomi told Markets Media: “So far 11 banks and 70 buy-side firms have signed up with more in the pipeline. We expect to have 100 buy-side firms on board later this year.”
In addition to adding clients, the firm has expanded geographically. Algomi launched in London and opened its American operation in 2013. At the beginning of this year the firm said it had moved to a larger office in Union Square in Manhattan and planned to triple staff. In January Algomi also recruited Jesper Bruun-Olsen from Tradeweb as head of Asia-Pacific operations to establish a presence in Singapore and Hong Kong.
“Algomi is looking at a number of exciting developments including voice enabled capability,” added Taylor. “Electronic trading has worked for commoditised bonds but we want to drive efficiency for more sophisticated relationships.”
The Desk’s Trading Intentions Survey this year found that 4% of users were already using Algomi but the second highest proportion of respondents, 54%, planned to move to the platform. A third of respondents expect to be using Algomi in five years time. The survey was conducted across 24 buy-side firms with $12.2 trillion in assets under management based in Europe and the US.
The study said: “Of the information transfer platforms designed to facilitate liquidity discovery, Algomi and Project Neptune are currently frontrunners.”
Respondents were asked to choose from 50 platforms which include those that assist pre-trade, such as Algomi, alongside traditional venues that match and execute orders.
Taylor said: “Algomi is not just blotter scraping for a list of intended trades. Our research has shown that in fixed income less than 1% of buy and sell trades arrive on the same day.”
The Honeycomb network allows buy-side firms to easily interrogate the data provided by banks to determine who is likely to be the best counterparty for an individual trade and provides a record of why a broker has been chosen, which is important for new regulations in the European Union which will require asset managers to provide more evidence of best execution to their clients.
“MiFID II does not specify how best execution has to be evidenced,” said Taylor. “Algomi provides an audit trail that you have systematically surveyed the market before deciding on who is likely to provide the best execution.”
MiFID II covers a range of asset classes and it is possible that a platform like Algomi could interrogate data in assets apart from fixed income.
“The power of information is transformative and we are only beginning to discover how smart our data is,” Taylor said.
Taylor added that the platform could be developed to work for non-commoditised trades in other asset classes such as the rates space which had experienced liquidity issues in recent weeks, but also structured notes or even commodities. He said: “We are not a start-up anymore and are rapidly reaching a state of influence in the market.”
Featured image by shock/Kozzi
Equities is the bellwether for derivatives market development, Fidessa's Chris Monnery writes.
U.S. regulators take lackadaisical approach to MiFID II.
FX Connect is creating a trading ‘cockpit.'
Traditional fixed income fund managers are looking to enter the European ETF market.
New MarketAxess COO says market development is at an early stage.