Neptune, the open standards network for pre-trade indications in bond markets, has formed a new company, Neptune Networks Ltd, to run the utility.
The board will be comprised of members of the banks and asset managers involved in the collaboration for the past 18 months.
Neptune says it recognises the importance of joint buy-side and sell-side governance in order to best meet the challenges in the industry.
17 dealers are currently connected to the system distributing over USD70 billion of gross notional and 13,000 structured pre-trade indications across 8,500 ISINs to their clients. The network is continuing to grow, having initially focused on European investment grade and high yield corporate bonds before expanding to emerging markets and covered bonds across 20 different denominations.
Neptune was specifically developed using the open FIX standard to minimise connectivity costs. It allows banks and investors to exchange controlled and targeted, real-time axe and inventory data, creating greater transparency of trading interests across the marketplace.
The deliberate use of a commoditised stack alongside the focus on a standard, simple ‘set of pipes’ means Neptune is able to provide opportunities for other market participants and vendors. Asset managers are able to connect to the sell-side via any combination of the Neptune GUI, their own in-house OMS, external OMS providers or FIX direct. This flexibility means that they can consume the high quality pre-trade indications using their preferred method without incurring additional technology costs from Neptune.
Tim Morbelli, vice president and senior credit trader at Alliance Bernstein says: "The launch of Neptune is a great step towards increasing transparency within the dealer community. By having a direct feed to consume multiple dealer axes in an electronic format is not only cost effective but makes our process more efficient."
With governance including both banks and asset managers, the network will continue to focus on new product classes and geographies. This collaborative approach means that any further investment will only be made if it serves the market as a whole rather than the interests of the few, or a single vendor.
Despite the rapid expansion, core to Neptune’s strategy is to maintain the high quality of pre-trade data passing over the network.
Grant Wilson, managing partner at Etrading Software and interim CEO of Neptune, says: “The incorporation of Neptune is the culmination of 18-months work with our consortium members across business, finance, legal, technology and strategy. We are pleased to have reached this milestone resulting in the formation of Neptune Networks Ltd. Our sponsors bring tremendous experience and a deep understanding of the challenges and opportunities facing the financial markets and we are delighted to cement the relationship with these market leading institutions and continue to drive the Neptune strategy forward.”
