Euronext today announces the global expansion of its Joint Venture and a $10 million investment in a minority stake in leading fixed income technology provider, Algomi. This strategic investment, which follows the agreement of a Joint Venture between both companies[1], will enable corporate bond traders to access Algomi’s innovative bond information network on a global basis and exchange risk more efficiently by identifying the most appropriate counterparty.

The global Joint Venture also involves working closely with regional exchanges and other partners to deliver holistic market access. As part of this, Euronext is working to establish an Automated Trading System (“ATS”) in North America, while discussions are already under way in APAC.

The bilateral nature of the bond market means the majority of trades, by value, are still completed away from e-platforms. Accordingly, the market is characterized by opaque and fragmented information with fragile liquidity. This initiative is designed to create a network of centralised information venues, turning disparate data into trade opportunities between counterparties yet maintaining the current client-to-dealer market structure.

Dealers will be able to access this network of venues either directly through their Algomi technology or through existing systems. Investor firms will benefit from the improved liquidity and best execution that the participating dealers will be able to provide on demand. The system is designed to maximise the range of eligible trades by minimising the potential leakage of crucial information.

This acquisition of a minority stake with governance rights reinforces the close links between the two companies and confirms Euronext’s ambitions in the fixed income space. As part of the partnership, Paul Humphrey, Head of Fixed Income, Rates & FX at Euronext, will join the Board of Directors of Algomi.

Stéphane Boujnah, CEO of Euronext:

“Algomi’s cutting edge technology, combined with Euronext’s established position in the market place, will enable us to further diversify our revenues and capture selected opportunities arising outside of Europe, whilst tackling the symptomatic illiquidity of global corporate bond markets in partnership with our clients. This partnership with Algomi is central to our Fixed-income ambitions and our wider FICC diversification plans as part of our ‘Agility for Growth’ plan. As a strategic investor taking a board seat, we will be in a strong position to oversee the successful growth of the business, and consolidate future trading activity globally.”

Stu Taylor, Co-Founder and CEO of Algomi:

“This long term commitment to Algomi by Euronext cements our position in the market.  We are particularly excited by the access to the Euronext network of global regulated exchanges and the liquidity opportunities this will provide our clients. Liquidity challenges in fixed income markets are global by nature. Partnering with an established exchange to provide fixed income traders with a single resource for price discovery, trade execution and settlement on illiquid bonds is a major part of our mission to unlock liquidity. The initiative will allow us to bring Algomi’s unique bond information network to new parts of the credit market, something which has been very positively received by our existing bank clients.”

Featured Picture via Euronext.com