London-based electronic trading consortium LiquidityHub plans to start distributing the liquidity of 15 banks in interest rate swaps by the third quarter of this year.Chief executive Robert MacLeod said the liquidity distribution platform would start by entering the dollar and euro-denominated interest rate swap and US Treasury bond markets by October, before moving into European government bonds. He also remarked there was a possibility of bringing other, more complicated asset classes onto the platform, such as credit. “We’re trying to make a system where it is easy to add on additional products, and I expect that we’ll do that,” he said.
LiquidityHub is owned by 15 of the investment banks whose liquidity it seeks to pool electronically. ABN Amro, HSBC and Société Générale Corporate and Investment Banking were the latest to join the venture, earlier this month. MacLeod held out the possibility of more dealers working with LiquidityHub, although not necessarily with ownership stakes in the business. Banks that owned and co-operated with LiquidityHub were also free to distribute their liquidity elsewhere, according to MacLeod, as the system was not meant to be exclusive. “LiquidityHub is about creating additional avenues for banks to reach their clients,” he said.
The consortium has previously pledged to help promote greater sophistication in electronic trading. It intends to implement a new trading protocol, Request For Stream, that will allow traders to see dynamic streaming prices on their screens, as opposed to static ones. MacLeod characterised LiquidityHub as a “messaging system”, and said it would leave trade processing and post-trade settlement activities to others in the market. Earlier in May, the venture announced it had struck its first non-exclusive distribution deals with New York- and London-based trading platforms Bloomberg and Reuters.
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