Liquidnet Fixed Income

The Dark Pool for Bonds…Corporate Bonds

With a potential liquidity crisis on the horizon, today’s corporate bond markets are primed for change and innovation.

Liquidnet’s Fixed Income Dark Pool is a new liquidity solution for buy-side traders to execute high-yield and investment grade bonds directly with each other, anonymously and in size. By centralizing highly sought-after institutional liquidity, we aim to revolutionize the way corporate bonds are traded. Our 14-year track record establishing one of the largest institutional equity dark pools, combined with our fixed income expertise and input from leading asset managers, has uniquely positioned us to deliver a technology-based solution for today’s challenges around corporate bond liquidity.

The time is now

For many years, issues surrounding liquidity supply and demand in the corporate bond market were masked by the ability of banks to warehouse large bond inventories. Now, post-financial crisis, the vast majority of corporate bond assets are held by institutions and those banks are required to keep higher levels of capital on hand that can no longer be tied up in corporate bonds. With dwindling dealer inventories, a new liquidity solution is needed to address the challenges of the lack of capital commitment and centralized liquidity within the corporate bond market.

When we founded Liquidnet in 2001, it was because we believed the equity market deserved a better, more efficient way to trade on a massive scale. After seeing similar inefficiencies plague the fixed income market I am confident that we are uniquely positioned to bring some much needed innovation to another asset class and completely redefine the way corporate bonds are traded. – Seth Merrin, Founder and CEO of Liquidnet

Liquidity—it’s all in the numbers

Our Fixed Income Dark Pool Members represent over 125 of the top fixed income institutional investors who collectively own over 50% of the US high-yield and investment grade assets under management. It is this critical mass and concentration of liquidity that will be crucial in alleviating some of the liquidity concerns plaguing the market today.

A revolution that starts with evolution.

As with any market innovation, we understand that adoption and change is a gradual process. The introduction of our dark pool, complete with OMS connectivity and the ability to sweep blotters, represents a massive change to the workflow of fixed income traders. We are not expecting a revolution to happen overnight—change will take both time and commitment from all parties to ensure the industry has a long-term solution for accessing corporate bond liquidity efficiently. For those specifically looking to execute corporate bonds safely, seamlessly, and in institutional size—that solution has arrived.