Bloomberg’s new ‘Bloomberg Bridge’ offering has launched in Europe and, supported by dedicated Goldman Sachs intermediation desks, has scaled its enabled user base into the thousands, while offering counterparties potential savings in execution efficiency.
As a new trading workflow, Bloomberg Bridge offers an intermediated route to all-to-all liquidity, minimising the heavy lifting for both buy-side and sell-side firms and maximising counterparty access.
Kat Furber, global head of emerging markets trading at Bloomberg explains how it has achieved early success just four months after launching in Europe.
How have this year’s markets affected demand for execution services from firms?
Across credit and emerging markets, bid-offer spreads have been widening this year. Therefore, firms have looked at alternative liquidity sources more frequently, along with the benefits of an anonymous all-to-all trading solution.
We recently introduced a new all-to-all service, Bloomberg Bridge, to support that demand. It supports intermediated trading on Bloomberg trading venues for corporate and emerging market bonds, via request for quote (RFQ) ticket workflow supported by dedicated Goldman Sachs intermediation desks.
Mutual clients of Bloomberg and Goldman will be eligible to access Bloomberg Bridge. As a result, even in its early days it has achieved a broad reach. The potential to source and provide liquidity easily is beneficial as there’s a chance it might not be accessible through a firm’s own counterparty universe.
What has the liquidity picture looked like over the last year and how does Bridge fit into that?
We launched Bloomberg Bridge support on our UK and EU trading venues to complement existing, highly valuable, trading relationships. When you launch an all-to-all inquiry, you can add the Goldman Sachs Bridge intermediation desks as a counterparty to an RFQ, in addition to your existing counterparties, which means that you can also receive responses back in the usual manner. For example, Bridge provides an alternative source to expand upon a participant’s direct liquidity counterparty relationships, even if it’s just a proof of access to additional pricing sources. So this means that Bridge complements existing RFQ trading relationships.
Alternatively, users have the option to submit RFQs only to Bridge, with Goldman Sachs acting as the intermediary counterparty to their trade, allowing for anonymous access to the enabled liquidity pool. Liquidity providers can similarly receive RFQs in the usual manner.
How might Bridge fit into the pre-trade decision tree for a trader?
It slots nicely into the trader’s existing workflow as counterparties can add Bloomberg Bridge for a single security or list trading. So, even if you’ve got a large number of trades, it is easy to include Bridge on all of them. Enabled users can also utilise our automation tools when trading. For instance, Bloomberg’s Sort Best tool, which enables smart dealer selection, is based on a series of parameters, such as best price or axe availability, now also has the ability to automatically include Bridge on enquiries. Bridge is also supported by our automated trading solution, Rule Builder, where your dealer selection logic can now include Bridge on inquiries if specific criteria are met for the trade.
What might be the challenges in onboarding a system and how have you overcome these?
Typically, an intermediation offering would require new onboarding, which can be time intensive. As eligible counterparties will have an existing relationship with Bloomberg and Goldman Sachs, that’s one less hurdle to deal with. Goldman Sachs will be the intermediary counterparty to Bridge trades, so enabled users will always face the Goldman Sachs entity that they have an existing relationship with. We were therefore able to launch with “critical mass”, because many firms already had existing trading relationships established with Goldman Sachs. They were ready to go from day one.
Pre-trade analytics have become incredibly important this year because pricing has been very hard to pin down in the market, how do pre trade tools integrate with Bridge?
Bloomberg is a valuable and reliable source of pre-trade intelligence, particularly our tools that aggregate information across dealer inventory, runs and axes that are sent over ALLQ, IB, etc. We’ve been focused on how we integrate Bloomberg Bridge into this workflow. On IMGR you can set up alerts and searches, which means that you can now see market data and trading interest. So, when you’re analysing information in preparation to do your next trade, you see all of that existing information along with any Bridge inquiries that are either live or have occurred recently and even click to respond to them.
How does Bridge play in different scenarios?
When markets are volatile, and there’s a need to get trades done quickly, sourcing liquidity from a very broad group of potential respondents can be additive. We often hear about one-sided markets and the beauty of Bloomberg Bridge is that it allows you to go beyond traditional liquidity providers to access a broad range of market participants. That can be helpful when you’re trying to find that one person on the other side in a directional market.
You mentioned you have critical mass, who is engaging and how?
We launched with thousands of users already enabled. The market participants that are responding to pool inquiries broadly ranges across traditional sell side, alternative liquidity providers, hedge funds and traditional buy side We’re really pleased with the level of engagement, and we’re seeing consistent growth in client usage of Bloomberg Bridge.
With workflow efficiency being a high priority, what can help users trade more efficiently?
The Bloomberg Terminal is a trusted source of analytics and market intelligence which means many of our customers are already using the broader connectivity and integration at their fingertips, be it in a Launchpad worksheet, or through their orders that are in TSOX, our fixed income execution management system (EMS), or through their positions in Bloomberg AIM our buy-side order management system (OMS). That means there’s no additional setup to start being alerted on a Bloomberg Bridge enquiry. If you use these tools, we can start presenting you with pop-ups whenever there is Bridge activity in securities of interest.
In addition, existing straight-through-processing (STP) enables counterparties on both sides of the trade to benefit from seamless workflows as there’s no incremental technology lift to ingest the trades back into their systems post trade.
