Vega-Chi US has launched the only high-yield bond trading platform solely for institutional investors.
The electronic marketplace is initially being supported by over 40 buy-side participants with more than 60 firms in the pipeline to join within the first few months of trading.
The platform is currently focused on high yield and distressed securities only.
The Vega-Chi trading platform offers institutional investors the ability to trade directly with each other in an “exchange-like” electronic setting without the need for intermediation by a broker-dealer and therefore enables the buy-side trading community to achieve better pricing for and control over their trades.
Demand from institutional investors for more efficient trading comes at a time when dealers are facing unprecedented changes to their traditional business models, and as a result are less able to provide the levels of liquidity and capital commitment that buy-side firms require.
“Today marks an important step for the credit markets,” says Constantinos Antoniades (pictured), chief executive of Vega-Chi. “For the first time, the buy-side has an interface to trade freely with each other, directly matching orders with others in the institutional investment community. This provides a compelling, cost-effective alternative to the dealer-to-client market structure, which has for so long been the only option available for market participants.”
“The credit markets are facing unprecedented regulatory and capital challenges. By directly sourcing liquidity from buy-side participants, Vega-Chi will provide institutional investors with superior pricing, while freeing up dealers to focus on higher-value, less capital-intensive services,” says Brad Golding, managing director at Christofferson Robb, a New York-based asset manager. "Ultimately, this should be all-around good news for the industry."
The Vega-Chi platform offers transparency, full anonymity, efficiency and a highly functional user interface designed with input from more than 50 institutional investors.
The trading system is available to institutional investors only, and has no upfront or ongoing costs for use. Participants are charged a fee ranging from three cents to 6.25 bond cents each time they execute a trade on the platform, considerably less than the typical bid/offer spread in the over-the-counter market.