BlackRock Plans Bond-Trading System, Bypassing Banks: WSJ

BlackRock Inc. (BLK), the world’s largest money manager, is planning to set up a bond-trading system that will allow it to make transactions directly with other investors and bypass dealers, the Wall Street Journal reported.

The electronic trading platform slated to start this year may cut revenue at securities companies that have acted as middlemen in the credit markets, according to the article. The system is being developed to reduce costs and make up for Wall Street’s diminished ability to provide liquidity, not to compete with investment banks, the newspaper reported, citing Richard Prager, a BlackRock managing director.

“It’s not going to cannibalize Wall Street,” Prager, also head of global trading, said in an interview with the Journal. “If there’s a savings available to clients, we want to give it to them.”

Fiona Tyndall, a Hong Kong-based spokeswoman for BlackRock, didn’t immediately reply to an e-mail seeking comments. Katherine Cheung, a Hong Kong-based managing director for BlackRock, didn’t answer two calls to her office phone.

The trading platform would be run by New York-based BlackRock Solutions and offer clients the ability to deal in corporate bonds, mortgage securities and other assets, the Journal said. Customers would include sovereign-wealth funds, insurance companies and other money managers, according to the article.

Bloomberg LP, the owner of Bloomberg News, competes with Reuters in providing news, information and trading systems to the financial community. Bloomberg Tradebook competes with Instinet Group Inc. in matching stock trade orders.

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net; Bei Hu in Hong Kong at bhu5@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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