10.26.2017
By Rob Daly

ICE-BondPoint: It’s About the Data

Intercontinental Exchange’s planned $400 million purchase of Virtu BondPoint follows a familiar script in the exchange business these days: it’s more about the data than the actual trade matching.

BondPoint, launched way back in 1999, was a Knight Capital business, before corporate mergers moved it under the ownership of KCG and then Virtu.

A specialist in odd-lot micro trades of corporate, municipal, and agency bonds, BondPoint is one of several dozen electronic fixed income trading platforms dotting the landscape, and its revenue will hardly move the needle for global giant ICE. But the deal gives ICE CEO Jeff Sprecher a data-rich platform to potentially expand in fixed income.

Anthony Perrotta, Tabb Group

Anthony Perrotta, Tabb Group

“Since 2014, BondPoint has made strides to raise its profile with institutional market participants, but their corporate bond-trade size is well below $100,000 on average, which puts it into the micro-lot bucket for trades,” said Anthony Perrotta, CEO of consultancy Tabb Group.

Perrotta noted that this is not ICE’s first foray into the US corporate bond market. The exchange operator has had access to the market via NYSE Bonds, which the stock exchange launched in April 2007, five years before ICE purchased the New York Stock Exchange.

“But all the data we have put together over the years indicates that flow is inconsequential,” he added.

If ICE decided to make the purchase strictly to gain a transaction-based business, it would be yet another high-profile acquisition in the past two years.

“There’s a lot of hype over the electronification of the corporate bond market,” Perrotta told Markets Media. “Obviously it has been in the media for years now. There’s been a renaissance of platforms that we have written about. The reality is that the market share of electronic trading of US corporate bonds has gone down over the last year, not up.”

However, ICE also has made investments in the US corporate bond market data space with its $5.4 billion acquisition of IDC in 2015, which it rebranded as ICE Data Services, according to Jim Greco, founder of Direct Match and Trading Places.

“Some may read this as complementing [ICE’s] data services,” said James Wallin, senior vice president at asset manager AllianceBernstein. “Its data services may be complemented by having this trading platform if you view data as a pillar of increased liquidity in the market. We have a view that proper data aggregation and distribution, is an underpinning of the future market structure. This is not inconsistent with that.”

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