The days of intermediaries in the credit markets may be growing fewer. A new platform developed by Blackrock will allow asset managers to trade bonds directly rather than go through an investment bank. The platform will enable cross-trades between sovereign wealth funds, insurance companies, and others trading corporate bonds, mortgage-backed securities, and other assets.
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The move is being called a cost saver for investors and not intended to lock out intermediaries. New regulations are forcing changes that affect the ability of Wall Street firms to serve clients’ trading needs. Trading in corporate and mortgage bonds has decreased among Wall Street firms since 2007 by as much as 70%.
The platform’s creators are seeking SEC approval for a launch at year end. It would also facilitate greater transparency for clients since bond bids and offers would now be posted.