Pete Borstelmann

The two firms plan to establish connectivity to their respective protocols and liquidity pools, with the move set to enable ICE Bonds’ automated trading system (ATS), ICE TMC, and MarketAxess’ Open Trading network to communicate with each other directly, enhancing depth and reach for users globally.

“This collaboration connects two mature liquidity networks in fixed income markets to offer new trading and risk management solutions for clients,” said Pete Borstelmann, president of ICE Bonds.

“By combining our complementary strengths, we aim to offer users expanded opportunities to access liquidity in corporate and municipal bonds, enhancing market efficiency and benefiting participants across both platforms.”

The interaction between these two liquidity pools aims to bolster price transparency, best execution and overall market liquidity for all users, through leveraging ICE Bonds’ retail brokerage and wealth management presence and MarketAxess’ institutional trading expertise.

Rich Schiffman, global head of trading solutions at MarketAxess, said: “We look forward to delivering enhanced value and innovation to our clients through this collaboration.Our joint efforts are focused on providing access to deeper liquidity across municipal and corporate bonds and diversifying trading options for participants in our marketplace.”

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Volumes in Q4 had doubled compared with the previous quarter and marked the strongest period of activity the exchange had seen since first introducing portfolio trading.

The increase follows the exchange’s decision last year to re-launch its ICE Bonds portfolio auction trading tool which allows institutional investors to trade a portfolio of bonds to one or several participants through At-the-Market and At-the-Close trading sessions.

ICE also integrated its fixed-income trading platform with the BlackRock Aladdin investment operations system in February last year to offer buy-side firms access to its portfolio auction tool.

“ICE Bonds was established to bring greater efficiency and improved trading protocols to the fixed income markets,” said Peter Borstelmann, president of ICE Bonds and head of ICE ETF Hub.

“With portfolio trading becoming an increasingly important part of our customers’ trading strategies, we’re pleased to see such strong interest from the institutional investment community for our portfolio auction protocol.”

Portfolio trading which allows traders to bundle multiple bonds into a single basket to be executed in one transaction has become increasingly popular with market participants in the last year to manage risk brought on by volatile market conditions.

Research published by Greenwich Associates in June showed that almost 40% of fixed income investors in Europe said they had either executed or planned to execute a portfolio trade within the next year.

JP Morgan also recorded a huge uptake in portfolio trading in August last year stating in a client report that it had already executed 77% of the total portfolio trading volumes it executed throughout 2019.

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Known as ICE Select, the application provides access to liquidity from ICE BondPoint, ICE TMC and ICE Credit Trade, which collectively offer trading in corporates, municipals, treasuries, agencies and emerging market bonds.

Traders can also adopt various execution protocols through ICE Select, such as click-to-trade, portfolio auctions and request for quote (RFQ). It also includes pricing and data from ICE Data Services, with plans to extend this later in the year.

“At a time when the industry is experiencing more day-to-day volatility, complexity and uncertainty, our customers need sophisticated trading tools that provide access to liquidity across fixed income markets,” said Marshall Nicholson, president of ICE Bonds. “By creating a single point of access for our three platforms, and offering it alongside ICE Data Services data and analytics, we’ve created a flexible and convenient way for our customers to access trading protocols and manage risk.”

ICE Bonds was formed in February last year, bringing ICE’s various fixed income focused acquisitions, including BondPoint and TMC Bonds, under a single business division. The move aimed to provide clients with greater choice in trade execution and greater access to liquidity.

ICE acquired the BondPoint platform from Virtu Financial for $400 million in 2017 following the market maker’s $1.4 billion merger with KCG, fighting off competition from other major bond players including MarketAxess and Tradeweb. The following year ICE then acquired trading venue TMC Bonds from investment bank owners Bank of America, Citi and Morgan Stanley, for $685 million.

ICE also plans to extend the ICE Select application to include access to liquidity through ICE Bonds via its ICE ETF Hub later this year. The ICE ETF Hub ecosystem reported record volumes during the first quarter this year, after onboarding Goldman Sachs as an authorised participants, and rolling out various new functionality.  

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The connection with BlackRock Aladdin will provide investment firms with access to the ICE Bonds Portfolio Auction, an execution tool that allows participants to auction a portfolio of bonds on an ‘all-or-nothing’ basis to one or multiple market participants. 

Portfolios can consist of any number of bonds and can be all buys, all sells, or a combination of both. The buy-side can also participate in two trading session formats, at-the-market or at-the-close so that traders can use ICE Data Services’ continuous evaluated pricing or end-of-day evaluations. 

“By bringing this protocol together with our ICE Data Services’ continuous evaluated prices, portfolio managers can execute as close as possible to NAV prices, significantly reducing tracking errors against benchmarks,” said Marshall Nicholson, president of ICE Bonds.

Portfolio trading has increased in popularity in recent years as a means for buy-side firms to transfer large amounts of credit risk. More commonly recognised as basket or program trading, the protocol has been part of the landscape for a while, but with the electronification of global bond markets and a surge in fixed income ETFs, portfolio trading has become an efficient way to deal with large, complex and multi-faceted bond transactions.

The process used to be very manual, consisting of lots of spreadsheets and back and forth with counterparties to price and execute individual bonds, but fixed-income trading platform providers Tradeweb and MarketAxess have both rolled out portfolio trading services in light of demand from the buy-side for a more efficient method of trading multiple bonds in a single portfolio.

“The addition of this auction protocol to ICE Bonds’ existing RFQ and central order book protocols will give traders a more efficient method to buy or sell a basket of bonds, which compliments the workflow of the ICE ETF Hub, our innovative, open architecture solution supporting the primary market for ETF trading,” Nicholson added.

BlackRock’s flagship Aladdin platform is at the forefront of the asset manager’s long-term technology focused strategy. Last month, chief executive Larry Fink said the buy-side powerhouse is looking to make Aladdin the ‘language of portfolios’, as it aims to further support the sustainable investing goals of its clients.

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US exchange group Intercontinental Exchange (ICE) has combined its fixed income trading platforms under a new business known as ICE Bonds.

The new division brings together ICE BondPoint, TMC Bonds and ICE Credit Trade under singlular management, alongside continuous and end-of-day pricing and analytics provided by ICE Data Services. ICE Bonds will offer clients various anonymous and disclosed trading methods, including click-to-trade, request for quote (RFQ), and portfolio auctions.

Marshall Nicholson has joined ICE from technology-driven broker-dealer Millennium Advisors to lead ICE Bonds as president. Nicholson was formerly managing director and president of BondPoint, which ICE acquired from Virtu Financial for $400 million in 2017. The head of TMC Bonds, Tom Vales, will report to Nicholson as COO of ICE Bonds.

“By combining ICE’s existing execution platforms and leveraging the extensive pricing and analytics offered by ICE Data Services, we will offer customers unprecedented access to liquidity, trading protocols and choice for executing their trades,” Nicholson commented.

“This new structure allows us to both optimise efficiencies and provide customers with better solutions to meet their needs. I’m excited to join forces with Tom Vales and the rest of the ICE team as we work with our many customers to make ICE Bonds the premier trade execution provider to the fixed income community.”

ICE has made efforts in recent years to bolster its fixed income trading business through the acquisitions of BondPoint and TMC Bonds, and stated in August that it was planing to combine the businesses under a single entity. ICE also revealed that there had been an increased demand for access to BondPoint with volumes up 33% so far this year.

“ICE has a long and exemplary track record of using advanced technology and innovation to bring more transparency and efficiency to opaque markets,” said ICE’s president Ben Jackson. “As fixed income markets continue to evolve, bringing our execution platforms under a single structure and leadership team allows us to focus our efforts and provide our customers with a wide array of tools to accurately value bonds, find inventory, efficiently trade and manage risk.”

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