Bond Platforms Improve Municipal Securities Liquidity

Terry Flanagan

An alliance between two bond trading platforms aims to improve liquidity in the U.S. municipal bond market by aggregating “Bid Wanted” requests, or requests by investors who wish to sell a security.

BondDesk will enable the Bid Wanted requests generated by financial advisors on the BondDesk platform to be distributed through Fabkom, a trading technology provider and aggregator of municipal bond trading information for broker-dealers.

The alliance will expose a greater number of dealers to Bid Wanteds, creating a more competitive and efficient market and helping to improve municipal bond prices for retail investors.

The 105,000 financial advisors who use BondDesk’s advisor workstations generate over 7,000 municipal bond Bid Wanted requests per day.

“We want to create the most competitive platform by aggregating the largest amounts of liquidity,” said John Bagley, president of BondDesk Trading. “While we have 170 dealers on our platform today, partnering with Fabkom will expose our clients’ Bid Wanteds to even more dealers who will have an opportunity to compete for these bonds.”

Fabkom combines Bid Wanteds from inter-dealer brokers and is used by more than 175 firms. BondDesk is the first ATS to advertise Bid Wanteds on Fabkom.

A Bid Wanted states the intention of a holder of a security to sell and entertain bids. The final price is subject to negotiation. A Bid Wanted is frequently seen on published market quotation sheets.

The Fabkom system receives Bid Wanteds via a live feed of information. Users can view the data by contributing company or through a detailed search page, which can be saved and recalled.

“We are looking forward to getting BondDesk’s Bid Wanteds directly onto the Fabkom platform and into our clients’ workflow,” said Carl Bloksberg, vice president of Fabkom. “Our clients appreciate having Bid Wanteds from multiple sources all in one place because it improves the efficiency of their bidding process. Bringing such a high volume of Bid Wanteds onto our platform from BondDesk will give our clients the opportunity to do a lot more business.”

BondDesk and Fabkom will launch the Bid Wanteds connection with an initial group of clients in September. Fabkom dealers who are current BondDesk clients will have the opportunity to bid on bonds through either platform.

Because there is so little pre-trade transparency in the municipal securities market, the Securities and Exchange Commission is considering ways to provide more information about bids and offers, or other trading interest, widely to market participants.

One way is to amend Regulation ATS to require an alternative trading system (ATS) with material transaction or dollar volume in municipal securities to publicly disseminate its best bid and offer prices and, on a delayed and non-attributable basis, responses to Bids Wanted auctions.

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