BlackRock Inc., the world’s largest money manager, tested its bond-trading network last week among some clients.
The test involved matching client orders on the firm’s Aladdin network and didn’t require the participation of dealers, said the person, who asked not to be identified because the matter is private.
BlackRock, which manages $3.68 trillion in assets, said in April it was starting a bond-trading platform that would match clients’ orders using its own system, rather than relying on Wall Street firms or other electronic networks to trade bonds. The platform may shut off a source of revenue for investment banks, which have seen fees from trading bonds for money managers decline amid interest rates near record lows and Europe’s sovereign-debt crisis.
“The system is designed to enhance liquidity for our clients and future testing will include third-party dealer participation, as necessary, to achieve that,” Bobbie Collins, a spokeswoman for the New York-based firm, said. Further testing will continue periodically until the network’s formal launch, Collins said.
The service is open to clients who use the Aladdin investment-management system. BlackRock Solutions, the unit that advises financial institutions and governments on hard-to-value-assets, was selected by the U.S. in 2008 to oversee tainted holdings at the peak of the financial crisis.
The Wall Street Journal reported earlier today that BlackRock had tested its bond-trading system without telling securities dealers.