The fixed income trading platform space has started to consolidate with news that MarketAxess is buying US Treasury trading platform LiquidityEdge for $150 million.
Established in 2015, LiquidityEdge offers a bespoke trading ecosystem to connect a community of dealers, market-makers and institutional investors to trade in the $500 billion average-daily-volume US Treasury market. The firm claims that its custom liquidity pools, as well as direct dealer streaming capabilities, for on- and off-the-run US Treasuries has been quickly adopted by a diverse client base and adds that in conjunction with MarketAxess’ global trading network of over 1,600 institutional participants, this acquisition creates a “compelling combination” for global fixed income market participants.
“Through the acquisition of LiquidityEdge, we are bringing rates trading capabilities to MarketAxess to complement our leading position of electronic trading in the global credit markets,” says Chris Concannon, president and COO of MarketAxess. “This will not only enhance the trading experience for our dealer and institutional investor clients, but also offer a truly innovative solution for dealers to stream US Treasury quotes to a tailored audience.”
Nichola Hunter, CEO of LiquidityEdge, adds, “Across a few short years, LiquidityEdge has grown to become one of the leading marketplaces to trade US Treasuries. Offering an alternative to incumbent trading protocols, LiquidityEdge continues to record daily highs in excess of $25 billion. That tremendous growth is made possible by our cutting-edge approach to liquidity management and superior technology solutions, something also shared by MarketAxess. MarketAxess has been a true pioneer in driving the evolution of the fixed income markets, and we’re thrilled that LiquidityEdge will add to that story.”
MarketAxess has also announced the expansion of hedging capabilities to include Treasury hedging for its credit products, utilising LiquidityEdge’s technology infrastructure and liquidity network. Currently in development and targeted to launch the initial phase in the fourth quarter of 2019, the firms say this new functionality will enhance a client’s ability to simultaneously hedge a credit spread transaction within the same workflow, maximising efficiency and reducing rate movement risk. The partnership with LiquidityEdge will add Treasury net hedging capabilities for aggregated sets of corporate bond trades.
The transaction is expected to close in the fourth quarter of 2019, subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals.