Neptune opens to all-comers and expands range of products covered

Neptune, the open standards network for bond trading, has expanded the range of bonds, currencies and tenors supported on the network and opened its pre-trade information systems to all-comers. The firm has also addressed concerns over potential information leakage by allowing providers to calibrate the amount of information seen by each subscriber. The platform, which launched in August with the support of 14 banks and 20 buy-side firms, wants to give banks confidence in the system and to integrate their risk management systems with its technology. Over coming months, contracting liquidity in fixed income markets is likely to drive consolidation in the overcrowded sector, which has been inundated by new entrants as the market goes digital.

Neptune, the open standards network for bond trading, has opened its doors to all-comers in a move aimed at building liquidity on the platform.

After launching with the support of 14 banks and 20 buyside firms in August, Neptune has opened its pre-trade information system to the global trading community,and expanded the number of bonds, currencies and tenors its supports on the network.

Some banks have had doubts over Neptune’s transparency-focused protocols, with information leakage seen as a potential threat to their ability to make markets, but the network has addressed some of those doubts by allowing providers to calibrate the amount of information seen by each subscriber.

“Our vision is for banks to have the confidence to integrate their risk management functions with Neptune, but some have had understandable concerns about information leakage and we have addressed that, “ said Sassan Danesh, a partner at E-trading Software, which is managing the project. “As with any change in market structure it takes time to get it right.”

Neptune offers a commoditised network that allows banks and investors to exchange real-time axes and inventory. The platform hopes to benefit in Europe from new transparency requirements under the Markets in Financial Instruments Directive, which will require trading venues and market participants to disclose bid and ask and depth of trading interest on a range of securities.

MiFID is set to come into force in January 2017, but may be delayed.

Higher capital costs have prompted banks to cut balance sheets in recent years, strangling liquidity in fixed income and related derivatives markets. Neptune lists US$16bn of gross notional and nearly six thousand line items, referencing four thousand ISIN’s.