Galaxy MTF, a new trading platform for European corporate bonds being set up by TradingScreen, has received regulatory approval, and is expected to be officially launched in September.

The multilateral trading facility, based in Paris, is one of three bond trading systems that have been created in response to a French initiative in 2010 called the Cassiopeia Committee, designed to promote liquidity in corporate bonds.

“The system is operating, and we are now in the process of onboarding some members,” said Jean-Philippe Malé, director-general of Galaxy MTF in London. “We are working with a handful of banks, broker-dealers, asset managers and hedge funds. The second phase consists in aggregating liquidity before we officially launch it.”

BondVision and Tradeweb, he said, were quote-driven markets. Market-makers posted quotes on securities and investors could trade at those prices, but they could not initiate trades by sending in orders. Galaxy will allow investors to do that, posting market or limit orders.

“At the moment there are a number of small to medium sized transactions that can’t take place because of faulty market infrastructure,” Malé said. “The existing infrastructure makes it quite efficient to execute bigger transactions, but less efficient to handle smaller orders.”

Click here to read the full aricle (subscription reqired).

Jon Hay - EUROWEEK, August 1, 2011