Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Trading Technology

00:00 AM
J.C. Louis
J.C. Louis
News
Connect Directly
RSS
E-Mail
50%
50%

Visible Markets Rolls Electronic Trading Application for Structured Bonds

The system will run electronic auctions for collateralized mortgages and asset-backed securities.

Visible Markets, an electronic trading platform for structured fixed-income products, is about to go live.

Promoting transparency and price discovery, the system will run electronic auctions for collateralized mortgages and asset-backed securities.

Launched by co-founders Brian Robertson and Sam Choi, Visble Markets' auction offers two-way benefits. A dealer posts a bond with a reserve level. Once bids meet the level, the bond goes to the highest bidder. "Sellers get a more competitive price and buyers know what they should be paying by seeing other bids," says Robertson, a former Amazon.com executive who is now CEO of Visible Markets. "The auction is anonymous, and there is more price data than is available in the telephone-based world."

Robertson says that he wanted to help build an electronic system to address structured finance, because it is the "biggest category of fixed income." True to the development cycle at Amazon, where Robertson helped build and launch the toy business, Visible Markets ran focus groups and user tests to involve customers in every design stage.

The positive response, coupled with the auction site's decision to adopt a fee-based transaction, helped it to raise $12 million in an early round of financing from Greylock Venture Partners."Asset managers are frustrated with illiquidity in the bond market. Dealers are determined to find cost-effective ways to reach mid-market and smaller clients, who face larger spreads. Most fixed income still happens on the telephone, so dealer sales forces concentrate on larger clients," says Robertson.

Choi, the chief operating officer at Visible Markets, says the firm's auctions system "levels the playing field" in structured finance. "The pricing model is up front. There is no hidden spread." Instead, the site will use a fee-per-transaction revenue model.

Visible Markets will also pioneer price ticker data that surpasses existing data that is available. "Until now, there's been no data for fixed-income spread products," Robertson contends.

Register for Wall Street & Technology Newsletters
Video
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.