TradingScreen has created a multilateral trading platform to streamline the process of corporate bond transactions by centralising the buying and selling of corporate bonds in Europe.

TradingScreen, a provider of execution management systems to brokers across multiple asset classes, is to launch a multilateral trading facility (MTF) to deal with European corporate bonds.

The electronic platform, named Galaxy, will be available for use by anyone regulated and authorised to buy and sell corporate bonds in Europe. The aim of the initiative is to create an increasingly liquid and transparent market for consumers. 

TradingScreen's initiative is in response to a report by the Cassiopeia Committee published in April. The committee was formed by the French economics ministry and includes representatives from major issuers, sellers and investors.

Among the needs outlined for a more efficiently regulated corporate bonds market were open order matching, detailed pre- and post-trade reports and stricter governance.

Philippe Buhannic, CEO of TradingScreen, said the MTP signals the next step in increasing market efficiency and lowering transactional costs for buyers and sellers. By coalescing the purchasing process, TradingScreen aims to reduce market fragmentation and streamline communication between market users.

To be eligible to be traded via Galaxy, bonds will need have a reasonable level of liquidity. A committee at the MTP will assess applications for submission on a case-by-case basis.

Although the platform will be open to any interested investors, the company predicted  the platform will appeal mainly to institutional investors. Michel Croz, head of TradingScreen sales for France, Belgium, the Netherlands and Luxembourg, said many of the issuers, sellers and buyers of corporate bonds in France had expressed interest in the platform.

TradingScreen believes the model has the potential to spread to other types of bonds and geographical markets.

Galaxy will aggregate orders with prices and other relevant information accessible to all participants in the transaction. Records of the transaction and post-trade performance will also be made public.

LCH Clearnet will handle the clearing of securities on the platform. European and international security depositories will be consulted on settlement and delivery. The market surveillance operation will be outsourced to professional providers.

TradingScreen expects Galaxy will be live by the end of 2010.

Tamsin Meakin, Hedge Funds Review, August 06, 2010