(Bloomberg) — Cboe Global Markets Inc. is planning a new electronic-trading platform for U.S. Treasuries, expanding the company’s services into fixed income for the first time.
The exchange operator will launch the dealer-to-dealer trading platform early next year, according to a statement from the Chicago-based company Thursday. Subject to regulatory approval, it will be Cboe’s first U.S. cash fixed-income product.
“The Treasury market could benefit from analyzing liquidity in a more quantitative fashion and making decisions based on those findings,” Ben Leit, global head of FX sales, said in an interview.
Cboe currently provides trading platforms and products in equities, derivatives and foreign exchange across North America, Europe and Asia. Its new product, Cboe Fixed Income, was designed for broker-dealers in the U.S. Treasury market to source liquidity and allow large-order trades while also “reducing market impact,” the company said.
“FX and Treasury markets are supposed to be liquid markets, but if you don’t have the right protocols in place, trades can create more price action than they should,” Leit said. “This trading platform should create a healthier environment.”
Cboe said it can leverage its experience and clients in the foreign-exchange market, where it has been trading for roughly two decades. The fixed-income unit will also use “full-amount” technology, which allows large orders between dealers with less risk and causes less of an impact on the Treasury market, according to the company.
Clients “will be able to transact against the best quote from a single liquidity provider, while satisfying the full amount of the order to help minimize information leakage and slippage,” the company said in the statement. Trades will also print in single executions to reduce ticket costs.
“The Treasury, rates space is crowded, but we’re taking a novel approach” through larger trade offerings and analysis, said James Arrante, director of FX product management at Cboe.
The company is in the process of registering the new product with the Securities and Exchange Commission as a government securities broker-dealer, and plans to become a member of the Financial Industry Regulatory Authority, according to the statement.
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