BNY Mellon and HSBC Team Up with Algomi To Unlock Corporate Bond Liquidity

NEW YORK, Oct. 17, 2017 /PRNewswire/ -- BNY Mellon and HSBC are each partnering with Algomi, a bond market infrastructure provider, to expand corporate bond trading opportunities for their custody clients and the wider market. The collaboration is expected to bolster fixed income market liquidity by giving clients the ability to make select holdings information available anonymously on the Algomi Honeycomb network of market participants.

The initiative will increase trading in the illiquid corporate bond market, which has seen turnover shrink while outstanding debt has risen by 75% in the last decade¹. In a recent FCA study, a leading fixed-income trading house reported that the number of corporate bond trades resulting from orders and request for quotes has declined from around 65% before the financial crisis to 20-25% in 2017.²

To address this growing liquidity challenge, custody clients of BNY Mellon and HSBC will have the opportunity to make their bond holdings in custody available on a non-disclosed basis through a system powered by Algomi's Honeycomb network, and delivered through Algomi ALFA. Counterparties on the network will be able to query those bond holdings, which will alert the custody holder, and give them the ability to instruct their dealer to trade on their behalf while protecting the client's identity. This can be done directly through BNY Mellon or HSBC affiliated broker dealer's trading desk.

Enhancing liquidity in the multi-trillion dollar pool of custodial corporate credit holdings has the potential to significantly increase the number of possible trade matches, and therefore executed transactions. BNY Mellon and HSBC expect to roll out the initiative to clients early next year, potentially with other custodians.

"US companies rely on the corporate debt market for funding more than any other major financial zone in the world. By enabling the market to access potential trade matches with our custodial clients, we can play a significant role in not only increasing our clients' access to liquidity, but in improving the infrastructure of the entire market," said Michelle Neal, CEO of BNY Mellon Markets.

"This initiative demonstrates BNY Mellon's continued long-term commitment to developing innovative tools that help our clients achieve their investment goals," says Samir Pandiri, CEO of Asset Servicing at BNY Mellon. "This collaboration with Algomi is poised to replenish needed liquidity in the corporate credit markets."