Broadridge executes first trades on AI-driven digital platform for corporate bonds
Broadridge Financial Solutions has confirmed that its new AI-driven corporate bond trading platform, LTX, has executed its first trades.
Broadridge partnered with Jim Toffey, founder of Tradeweb Markets to create LTX, which combines powerful artificial intelligence (AI) with a new digital execution protocol that enables broker-dealers to improve market liquidity, efficiency, and execution for their buy-side customers.
Built on Broadridge's US Fixed Income post-trade processing platform, which processes over USD6 trillion in notional volume per day across 40+ dealer clients, LTX uses AI to help broker-dealers digitise their franchise to maximise liquidity for asset managers while delivering improved transparency, "BestEx", and minimising information leakage.
"Over the past three years, Broadridge has been working with a number of dealers and their buy-side customers to develop an AI-enabled digital platform creating liquidity, digitising workflows, and increasing efficiency in corporate bond trading," says Tim Gokey, Broadridge CEO.
"We're excited to announce the creation of LTX based on successful trading activity on the platform over the past several weeks. This is the latest example of Broadridge applying next-generation technologies to create powerful industry solutions for broker-dealers and asset managers."
Toffey, CEO of LiquidX, leads LTX alongside Vijay Mayadas, president of Global Fixed Income and Analytics at Broadridge, supported by a team of fixed income sales and trading professionals, technologists and data scientists.
LTX works by combining powerful AI to locate and connect natural counterparties with a new digital protocol, RFX, that enables dealers to efficiently aggregate liquidity across multiple counterparties and create trading opportunities in seconds. These new technologies amplify the critical role dealers play, enabling them to solve a key need for the buy-side.
LTX's RFX protocol allows dealers to unlock more value from their data and customer network by identifying and aggregating liquidity across multiple buyers bidding for their desired amount, which in turn helps improve BestEx for their customers. In addition, LTX AI and the new LTX Liquidity Cloud provide a more complete view into pre-trade and post-trade liquidity, further enhancing dealers' ability to aggregate liquidity from natural counterparties and better servicing their customers. These new capabilities enable broker-dealers and asset managers to digitise complex processes for more efficient corporate bond trading. Leveraging these next-gen technologies is part of Broadridge's investment in The ABCDs of Innovation – AI, Blockchain, Cloud and Digital – helping clients and the industry move markets forward into the future.
The total size of the US corporate debt market has grown to nearly USD10 trillion with only a small fraction traded daily and an even smaller fraction traded electronically. Of bonds that do trade, fewer than 25 per cent trade electronically today. The size, complexity and opacity of the market, along with more stringent regulations, have greatly increased the need for buy-side firms and dealers to access liquidity efficiently. According to a Greenwich Associates report published in January 2019, 82 per cent of corporate bond investors found trades above USD15 million in size "very difficult" to execute. LTX's AI, Liquidity Cloud and RFX will directly address these challenges.