New York - BNY Mellon and HSBC are each partnering with Algomi, a bond market infrastructure provider, to expand corporate bond trading opportunities for their custody clients and the wider market. The collaboration aims to bolster fixed income market liquidity by giving clients the ability to make select holdings information available anonymously on the Algomi Honeycomb network of market participants.
The initiative will increase trading in the illiquid corporate bond market, which has seen turnover shrink while outstanding debt has risen by 75% in the last decade.
To address this growing liquidity challenge, custody clients of BNY Mellon and HSBC will be able to make their bond holdings in custody available on a non-disclosed basis through a system powered by Algomi's Honeycomb network, and delivered through Algomi ALFA. Counterparties on the network will be able to query those bond holdings, which will alert the custody holder, and give them the ability to instruct their dealer to trade on their behalf while protecting the client's identity. This can be done directly through BNY Mellon or HSBC affiliated broker dealer's trading desk.
Enhancing liquidity in the multi-trillion dollar pool of custodial corporate credit holdings has the potential to increase the number of possible trade matches, and therefore executed transactions. BNY Mellon and HSBC expect to roll out the initiative to clients early next year, potentially with other custodians.