Wheels fall off LiquidityHub

In a statement, LiquidityHub announced it ceased electronic trading operations at the close of business on March 28. It added recent market conditions had “called into question the current scalability of [its] model”.

Sources close to the matter suggested the project had suffered from a dearth of enthusiasm among buy-side clients, as the credit and liquidity crisis had diverted their attention, as well as that of dealers.

LiquidityHub began in July 2006 to promote electronic trading in fixed income. It was supposed to allow dealers to take equity stakes in a platform that would pool and distribute their liquidity to allocated vendors in a range of fixed-income products.

By the end of 2007, 16 dealers had taken shares in the company, which offered dollar and euro interest rate swap prices dynamically across trading platforms Bloomberg and Reuters. The much-vaunted system had intended to accompany this by additionally pooling dealer liquidity in European government and US Treasury bonds.

According to LiquidityHub’s statement, strategic options for the future of the company are currently being considered. However, with the main plank of the project effectively abandoned, it is difficult to see where the dealer consortium can go next.

See also: LiquidityHub adds dollar interest rate swaps
LiquidityHub opens with euro swaps
LiquidityHub expecting launch in Q3
Trading platforms strike deal with LiquidityHub
LiquidityHub hires chief executive

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• Topics
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• Risk management
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• Derivatives
• Operational risk