Alternative trading system operator BondDesk has teamed up with market information company Fabkom to distribute bid-wanted requests, in a move the companies said will help retail investors get better prices.
Thousands of bid wanteds, announcements that a holder of securities wants to sell and will entertain bids, occur each trading day with investors typically seeking bids through their brokers who in turn seek bids through ATS' and broker's brokers. A vast majority of these bonds wind up not trading, meaning that upwards of 70% of that bid information, by some experts' estimates, ends up unavailable to many market participants.
But the new partnership, which BondDesk president of trading John Bagley said has been in development for the past three months, would potentially make the more than 7,000 bid wanted requests generated by 105,000 financial advisors each day available to a wider group than the 170 dealers on BondDesk's trading platform. Bagley said that having the data more widely available should both improve pricing and cause the execution rates to rise.
"While we have 170 dealers on our platform today, partnering with Fabkom will expose our clients' bid wanteds to even more dealers who will have an opportunity to compete for these bonds," said Howard Edelstein, chief executive officer and chairman of BondDesk Group LLC. "We are excited to add Fabkom to our list of partners that help bring greater competition, and thus better prices, to retail investors."
Many market participants and federal regulators have expressed concern that institutional investors, with resources beyond the reach of retail customers, have had near-exclusive access to various types of information, giving them an edge in understanding bond prices.
Participants in the Securities and Exchange Commission's fixed-income roundtable earlier this year expressed the desire to aggregate bid wanted information. Fabkom charges clients $250 per month for access to its data, and the company claims hundreds of accounts representing thousands of people among its customers.
BondDesk and Fabkom will launch the bid wanteds connection with an initial group of clients in September. Fabkom dealers who are current BondDesk clients will have the opportunity to bid on bonds through either platform, the companies said in a joint release.
"We are looking forward to getting BondDesk's bid wanteds directly onto the Fabkom platform and into our clients' workflow," said Carl Bloksberg, vice president of Fabkom. "Our clients appreciate having bid wanteds from multiple sources all in one place because it improves the efficiency of their bidding process. Bringing such a high volume of bid wanteds onto our platform from BondDesk will give our clients the opportunity to do a lot more business."
The announcement comes just days after BondDesk announced a similar partnership with Standard and Poor's aimed at increasing price transparency for trades that are less than $1 million in size.
