Deutsche Börse has acquired a minority stake in fixed income liquidity discovery start-up Bondcube.
London and Boston-based Bondcube is as an electronic platform for large, market-sensitive bond orders that are typically executed via the telephone. The firm uses trading protocols from other markets, such as equities, to optimise liquidity discovery in a marketplace open to both buy and sell-side participants.
Paul Reynolds, CEO of Bondcube - and a former Deutsche bank and UBS exec - says: "The perception of a lack of liquidity in the bond market arises because the existing trading infrastructure protocol means the buy-side can only request liquidity from the sell-side. To solve this problem Bondcube enables all users, whether buy-side or sell-side, to discover liquidity amongst each other, known as 'all to all'."
Deutsche Börse says its stake in the business was acquired for a "low sum in the single digit millions (GBP)".
Johannes Weßling, responsible for bonds trading at Deutsche Börse, says: "Through this exciting move Deutsche Börse enlarges its client reach with direct access to the buy side whilst offering unique benefits to the sell side with no disintermediary effect."
Bondcube has commenced signing-up customers and forecasts that clients will be trading with each other in the 3rd quarter of 2014.