Algomi, which provides data aggregation technology for finding fixed income liquidity, aims to launch direct connectivity between an asset manager and their largest sell-side banks to help trade large blocks.

Scott Eaton, chief executive of Algomi, told Markets Media that the firm is working on Algomi ALFA acting as a hub for bilateral relationships between an asset manager and their largest sell-side banks, whereby the banks will provide prices directly to the asset manager.

“Clients can see all the prices and venues on a single screen with market context permitting clients to satisfy their best execution requirements despite trading with a single bank and should help capture large block trades as direct connectivity lessens information leakage,” he added. “We are currently in testing with one bank.”

Eaton continued that Algomi’s business model is not to charge a transaction fee, so it would not lay claim to any of this data and there would be no information leakage.

Algomi ALFA was created byAllianceBernstein as an in-house liquidity intelligence tool to provide an aggregated picture of bond liquidity signals across multiple electronic venues, message platforms and direct dealer inventories. The fund manager sold ALFA to Algomi in 2017.

Pimco

Last week Algomi announced that Pimco is using ALFA inside the fixed income investment manager’s trading and data infrastructure. Pimco will integrate Algomi ALFA into its 100-strong bond trading desk in California along with its domestic and international offices to get a unified view of its whole fixed income inventory across global electronic venues and voice trading.

Dirk Manelski, chief technology officer at Pimco, said in a statement: “Fixed income asset managers need to quickly integrate and analyze data to stay competitive and Algomi ALFA’s strategic fixed income technology will capture, normalize and create a centralized repository of information that will help Pimco optimize efficiencies and cut costs.”

Richard Colucci, head of Algomi Americas, added in a statement: “Companies are beginning to make technology investments that can truly exploit data science and automation to grow and evolve with the market. These efforts are fueled by a robust and normalized dataset.”

Colucci continued that Algomi ALFA is cloud-enabled via Amazons’ AWS, compatible with API integration and built on top of OpenFin open source technology so it can easily integrate with other desktop applications.

Eaton said: “It is pretty exciting to have one of the biggest and most sophisticated fund managers using our software. It is a huge validation of our strategy and product.”

@PIMCO one of the world’s premiere fixed income investment managers, is using Algomi ALFA inside the firm’s trading and data infrastructure. PIMCO now has access to bond price info from all major electronic venues, message platforms and dealer inventory. https://t.co/sk7oQz4JNB pic.twitter.com/dpXLtE0dA8

— Algomi (@Algomi_Ltd) May 7, 2019

Eaton added that Algomi’s buy-side clients currently manage approximately $14 (€12.4) trillion and he expects more will join very soon.

“We provide front-end data aggregation but fund managers also want tools to make it easy to action and execute,” he said. “Auto-execution and index driven volumes are increasing and we have the ability to build tools to increase efficiency and feed algos the in real-time.”

Buy-side view

The Desk’s Trading Intentions Survey 2019 found that the most promising levels of engagement for the future are for Algomi and Neptune, with 14% of the traders that responded to the survey. Neptune allows institutional investors to access real-time bond pricing from banks in a standard format.

The survey said that in Europe last year traders focused on MiFID II going live, which introduced best execution requirements for fixed income.

“The absence of a single post-trade tape of price data, such as the US has with Trace,  means that pre-trade data tools such as Algomi and B2Scan are more popular with firms that have European operations, while asset managers that have US operations are more inclined towards proprietary pre-trade data tools,” said the report.

New strategy

Eaton took over as chief executive of Algomi in June last year to move the firm from a start-up to a sustainable business. At the time the firm had launched partnerships with custodians of bonds so clients could choose to receive alerts when looking to trade specific issues.

“We are de-emphasising the partnerships with custodians at the moment,” added Eaton. “The next evolution of the firm involves signing more buyside clients for Algomi ALFA and launching direct connectivity later this year. “

He continued that Algomi will expand to municipal bonds in a matter of time and add more venues as requested by clients.