Bloomberg has been granted regulatory authorisation to launch a multilateral trading facility (MTF) in Europe for the trading of OTC derivatives products.

Market participants will be able to execute interest rate swaps (IRS) and credit default swaps (CDS) on Bloomberg Trading Facility, using both request for quote and order book functionalities.

Bloomberg operates a similar platform in the US through its swap execution facility, which also enables the execution of IRS and CDS products, as mandated by rules under the Dodd-Frank act.

Regulations such as MiFID II are pushing all trading to regulated markets, though mandates have come into force in the US before Europe.

“Bloomberg’s MTF trading platform is a key addition to the portfolio of services we are providing our clients to enable them to meet their regulatory obligations, and will provide for a seamless transition into the MiFID II regulatory environment," said Jean-Paul Zammitt, chief executive officer, BTF and global head of financial products services division, Bloomberg.

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The service will allow clients to assess execution quality by comparing prices negotiated by the broker for each stock with those posted by the market, including regulated markets and Multilateral Trading Facilities (MTFs).

The Spanish trading group – full name Bolsas Y Mercados Españoles – announced its new VisualTCA service will use the underlying technology which supports its subsidiary Visual Trader.

In a statement, Jose Parga, chief executive officer of Visual Trader, said: “VisualTCA will help investment services firms provide a better service and will contribute to greater transparency in execution services, in line with recent discussion papers published by the European Securities and Markets Authority.”

At the end of each session, users will have the option to download a TCA report which has a summary and cost analysis broken down by market, client, broker and trader.

The service also allows for users to choose their own quality rations and to generate bespoke reports for clients or for internal use.

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Fixed income trading platform Bondcube has signed a deal with agency broker ITG’s US arm, making it a trading intermediary.

The deal will see ITG facilitate the settlement of trades between its clients and Bondcube users, increasing the probability of both sides being able to match up orders.

Bondcube told theTRADEnews.com that it has been discussing the deal with ITG for the past six months.

“It was clear that our businesses are complementary. ITG offers a blotter scraping model for fixed income business while we are based on anonymous indications of interest (IOIs) and our client bases are also complementary,” explained Paul Reynolds, CEO of Bondcube.

He also revealed the platform is in discussions with other potential liquidity partners as part of its growth strategy.

“A bit part of the liquidity problem in fixed income is caused by fragmentation, because the buy-side, who hold the liquidity, only deal with their brokers,” added Reynolds.

“We want to bring as much liquidity together as possible to maximise the number of matches so we will be making similar announcements to this in the next few months.”

Bondcube is also hoping that, by signing up liquidity partnerships with other businesses, it will be able to garner enough liquidity to reach the critical mass that the buy-side needs in order to justify the cost of connecting to its platform.

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A FX matching service launched by ICAP last year has seen strong demand and growing interest in automated trading, the interdealer broker has said.

ICAP launched the eFix Matching solution in May last year, looking to enable customers to execution currency fixes electronically via the EBS Market platform.

Average daily volume traded in April 2015 was 160% higher than in May 2014. The market has gone from virtually no automation at launch to seeing around one in four traded executed via is API.

David Casterton, CEO of global broking for ICAP, said: “We’re pleased with the development of eFix Matching, which is the first electronic and voice venture within the ICAP Group. Our voice brokers play a major role in building liquidity and momentum. Together with EBS we have successfully brought together our respective customers to execute on the platform which is at the forefront of Fix innovation.”

As well as seeing increased trading activity, the types of currency pairs traded have diversified. While EUR/USD dominated at launch, accounting for 76% of daily volume, it now makes up just 46%, while AUD/USB and GBP/USD have seen their share grow.

Recent months have also seen growing numbers of early order submission, which have risk pre-calculated, due to the platform’s first-in first-out matching policy.

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The regulator said the review is designed to assess the risks around dark pools, noting that the research will run from the second quarter of 2015 until the first quarter of 2016.

It follows the announcement last month that it is to conduct a market study of the investment and corporate banking sector in 2015, although there were few details on the exact terms of reference released today

Michael Horan, director of Trading Services at BNY Mellon-owned Pershing, said the parameters of the FCA review would all depend on what the regulator considers the term ‘dark pools’ to mean.

He said: “Many people use it as an overarching term for MTF dark books and broker crossing networks (dark books run by the investment banks), so I’m not sure which ones they are referring to.

“It could be referring to some dark pool operators allowing HFT firms into their pools and not informing their clients. Dark pools do have a purpose, but we have to make sure that they are trustworthy.”

News of a UK market review of dark pools comes after Barclays lost a bid to dismiss a lawsuit in the US last month, where it has been accused of misleading customers of its dark pool for financial gain.

New York attorney general Eric Schneiderman has been pursuing the bank over how it marketed its dark pool and the level of transparency the bank offered customers. 

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Societe Generale Prime Services has acquired a minority stake in the swap futures trading venue GMEX.

Formerly Newedge, Societe Generale Prime Services becomes the second company to invest in GMEX after German exchange operator Deutsche Börse took a minority stake last year.

GMEX’s flagship product is a swap future which tracks the interest rate exposure at each point on the yield curve by removing the expiry date and marking the contract to market against GMEX’s own Constant Maturity Index on a daily basis.

Swap futures have emerged as viable alternatives to OTC interest rate swaps which have become increasingly costly to trade due to global central clearing mandates.

Along with its swap futures offering, set to launch in the first half of 2015, GMEX also focuses on emerging markets exchange business partnerships enabled by multi-asset trading technology.

“The GMEX Group offers genuinely new ways to trade Interest Rates via their unique and versatile Constant Maturity Futures product,” said David Escoffier, deputy head of global markets for Societe Generale corporate & investment banking and CEO at Newedge. 

“That's exciting for our clients as they adapt to the new environment, for our industry, and for us as part of this venture.  Acquiring a minority share reflects our commitment to driving innovation in the derivative markets, and we will continue to look positively at other similar initiatives based on innovation, quality and focused on delivery value to our clients."

Hirander Misra, CEO and co-founder of GMEX, recently told theTRADEnews.com that the products have been receiving “very strong support from the trading community particularly the buy-side” as the venue gears up for launch.

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Swap futures platform GMEX has struck a deal with Eurex to list its products on the German futures exchange, with a view to go live in early April.

Through the agreement GMEX will utilise the Eurex’s execution and clearing arrangements, allowing buy-side firms to trade the product through their existing membership with the exchange.

Transactions will still be arranged through GMEX, however the rest of the trade will be subject to the same rulebook and clearing arrangements as Eurex’s own products.

The move will provide a major boost to participation in GMEX’s Euro-denominated Constant Maturity Future (CMF), and allows the new platform to circumvent the complications associated with setting up as a multilateral trading facility itself.

“If we were going for new venue approval it would take a year to get on bank’s work streams and now they can just roll us in with Eurex work they are doing,” said Hirander Misra, CEO of GMEX.

“Existing members can leverage their Eurex membership and we don’t have to be a MTF. Putting the Eurex wrapper around the product really accelerates the onboarding process.”

Misra added that the platform was receiving “very strong support from the trading community particularly the buy-side”.

GMEX’s flagship product is a swap future which tracks the interest rate exposure at each point on the yield curve by removing the expiry date and marking the contract to market against GMEX’s own Constant Maturity Index on a daily basis.

Swap futures have emerged as viable alternatives to OTC interest rate swaps which have become increasingly costly to trade due to global central clearing mandates.

The group is already partially owned by Deutsche Boerse, the parent company of Eurex, however the clearing and execution arrangement represents significant backing from the German exchange group.

GMEX has been granted regulatory approval from the UK Financial Conduct Authority (FCA), however the launch date for the swap futures contract is still subject to regulatory approval.

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Euronext will next week launch a market for trading non-listed securities electronically.

The exchange operator said the Euronext Expert Market will provide a transparent and secure platform for the sale of unlisted equities through weekly auctions.

Euronext Expert Market is a multilateral trading facility based in Belgium and aims to replicate the former floor-traded Marché des Ventes Publiques (Public Auctions Market), but using an electronic trading model instead of open outcry.

Electronification will standardise and automate the post-trade processes of non-listed secondary trading and, Euronext said, make the market more efficient and transparent.

The exchange operator said it also hoped the market for unlisted shares will help to finance the real economy by increasing the visibility and accessibility of securities in the small and medium-sized enterprises that make up the bulk of unlisted securities.

Euronext Expert Market will go live on 9 December with weekly electronic auctions every Tuesday for bonds, securities and other fixed income instruments. It will be open to all investors through their bank or broker.

Euronext Brussels CEO, Vincent Van Dessel, said, “There is an evident need in the market for a venue where non-listed securities can be traded. The ongoing disintermediation and growing number of private initiatives on the primary market, including crowd-funding, boost the demand for a reliable and transparent secondary market.”

Euronext said this is the first time a European market operator has attempted to launch an electronic secondary market for unlisted equities.

In Canada, incumbent TMX Group and new startup Aequitas Innovations, have both revealed plans to launch private share markets to improve investor access to unlisted securities. More generally, onerous reporting obligations have been highlighted as a major disincentive for smaller businesses to publically list, driving them away from capital markets as a source of financing.

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Turquoise’s Block Discovery service launched today with support from more than 10 brokers, which the multilateral trading facility (MTF) attributed to high demand from buy-side firms.

The London Stock Exchange Group-owned (LSEG) pan-European trading platform said it was already seeing greater block trading activity as market participants change their trading practices in preparation for the introduction of new rules in MiFID II.

New caps for trading on MTFs’ dark order books – set at 4% for individual venues and 8% across the market as a whole – will be applied to trades under the reference price waiver and some negotiated trades, but those qualifying for the large-in-scale waiver, used for block trading, will be unaffected.

“We’re witnessing a behavioural shift in the way orders are managed and sent to venues as a result of the dark pool caps in MiFID II,” said James Baugh, head of pan-European sales and marketing at LSEG. “At the beginning of the year, the amount of business on Turquoise that would be qualify for the large-in-scale waiver was less than 5% but is now up to 8.5%.”

From today, buy-side investors can use Block Discovery – which enables firms to place indicative parent orders while still being able to trade elsewhere without the risk of overfilling – via Barclays, Instinet, ITG, JP Morgan, Morgan Stanley, Neonet and Société Générale. Access is expected to be provided by Bank of America Merrill Lynch, Citi, Deutsche Bank and UBS in the coming weeks.

Working closely with the buy-side on the development of Block Discovery has been a key part of Turquoise’s strategy. It has held several buy-side working groups to decide the details of how the service will work to ensure it meets the needs of institutional investors.

Turquoise plans further meetings with its buy-side working group before the end of the year to help fine-tune the service based on initial data. In particular it will review its minimum order size which is currently set at 25% of the large-in-scale waiver level, and expects to increase this over the next year to further bolster the ability to trade in size on Turquoise.

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Agency broker Neonet will provide access to Turquoise’s Block Discovery service when the solution launches later this month, preparing itself for regulatory changes that will encourage more block trades.

The service aims to increase the probability of anonymous matching in larger sized orders within the platform’s randomised Turquoise Uncross system.

The service is being introduced as regulators take a tougher stance on dark pool trading in Europe through MiFID II, paving the way for more block trading and ensuing services. Caps on dark pool trading levels will not affect the large-in-scale pre-trade transparency waiver to encourage greater use of dark pools for institutional block orders.

Turquoise is subsequently looking to capitalise on these changes and draw liquidity to the Block Discovery service.

According to Neonet’s chief executive Tim Wildenberg, the kind of service Turquoise plans to offer could represent the future of dark pool trading.

“We have seen similar solutions in the US, and here Turquoise have replicated that model, evolved it a little bit and come up with a service which has the potential to become an important way dark is traded in the future,” Wildenberg told theTRADEnews.com.

“The idea is that if you subscribe – when you put the order into Turquoise Uncross – you will also notify the block discovery service that you have put the order in. The service will then listen for the subscribers to the service showing interest in the opposite direction and request they put an order in if there is a likely match.” 

The service already has the backing of JP Morgan, Instinet and Bank of America Merrill Lynch, with Neonet the first agency broker to get onboard.

“It is delivering exactly what investors are looking for – a higher quality dark pool more focused on large sized crosses,” added Wildenberg.

“It is potentially the future of dark, it is much more blocky and it is an interesting innovation that we are keen to support.”

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