Nasdaq Partners With Former Rates-Trading Execs for New Platformby
Three Treasury-market veterans are partnering with Nasdaq Inc. to develop a trading platform for the more than $500 billion of U.S. government debt that bond dealers trade each day.
CrossRate Technologies LLC, led by Peter Hirsch, David Light and Ken Tremain, will join with Nasdaq to create an alternative trading platform, according to a Nasdaq memo to clients obtained by Bloomberg and confirmed by Nasdaq representative Joseph Christinat in New York. Hirsch and Light are former fixed-income trading executives at RBC Capital Markets, and Tremain was previously head of interest-rates trading at Citigroup Inc.
The new platform, called Nasdaq CrossRate, is expected to be operational in the second half of this year, according to people with knowledge of the plan who requested anonymity because it hasn’t been made public. Nasdaq will allow dealers to direct trades away from its eSpeed platform, which reports trade data in real time, and into the CrossRate venue, which doesn’t report real-time data. The venue plans to keep part of the bid-ask spread and later rebate that sum to firms that don’t engage in trading practices that may disadvantage some market participants.
The platform is meant to bring together top bond dealers and trading firms, which are handling a bigger share of transactions in the market, and other dealers and traders, whose Treasury-trading businesses have been challenged by post-crisis regulations and changing technology. The top five bond dealers handled 60 percent of investors’ trades last year, up from 44 percent a decade ago, according to an October survey from financial-services consulting firm Greenwich Associates.
Dealers currently trade with one another on central platforms like Nasdaq’s eSpeed and ICAP Plc’s BrokerTec, where trades are reported in real time. Yet automated trading firms are becoming more prominent on those platforms, and made up more than half the trading volume last year, according to financial research firm Tabb Group LLC.
Nasdaq’s share of the Treasury market has eroded in recent years, according to Kevin McPartland, an analyst with Greenwich Associates. Nasdaq’s dealer-to-dealer platform had a market share of about 30 percent last year, the research firm found. Last year, the exchange operator introduced a program where traders could choose which groups to trade with, called eSpeed Elect.
Bloomberg LP, the parent of Bloomberg News, also provides Treasuries trading services.