Neptune, the open standards network for pre-trade indications in bond markets, today announced the formation of a new company, Neptune Networks Ltd, to run the utility. The board will be comprised of members of the banks and asset managers involved in the collaboration for the past eighteen months. Neptune recognises the importance of joint buy-side and sell-side governance in order to best meet the challenges in the industry.
17 dealers are currently connected to the system distributing over $70bn of gross notional and 13,000 structured pre-trade indications across 8,500 ISINs to their clients. The network is continuing to grow, having initially focused on European Investment Grade and High Yield corporate bonds before expanding to Emerging Markets and Covered bonds across twenty different denominations. This expansion is a natural progression as the client base broadens beyond the initial sponsors.
Neptune was specifically developed using the open FIX standard to minimize connectivity costs. It allows banks and investors to exchange controlled and targeted, real-time axe and inventory data, creating greater transparency of trading interests across the marketplace. This transparency is only possible because the network includes a robust data governance model for all users to minimize unintended information leakage.
The deliberate use of a commoditized stack alongside the focus on a standard, simple ‘set of pipes’ means Neptune is able to provide opportunities for other market participants and vendors. Asset managers are able to connect to the sell-side via any combination of the Neptune GUI, their own in-house OMS, external OMS providers or FIX direct. This flexibility means that they can consume the high quality pre-trade indications using their preferred method without incurring additional technology costs from Neptune.
Tim Morbelli, Vice President and Senior Credit Trader at Alliance Bernstein said, “The launch of Neptune is a great step towards increasing transparency within the dealer community. By having a direct feed to consume multiple dealer axes in an electronic format is not only cost effective but makes our process more efficient.”
The incorporation of Neptune is a further sign that market participants see Neptune as an increasingly important part of a well-functioning market place. With governance including both banks and asset managers, the network will continue to focus on new product classes and geographies. This collaborative approach means that any further investment will only be made if it serves the market as a whole rather than the interests of the few or, indeed, a single vendor.
Despite the rapid expansion, core to Neptune’s strategy is to maintain the high quality of pre-trade data passing over the network. Its unique combination of structured, open standard data with a joint governance model provides the basis on which the new organization can move forward and provide value that market participants require in difficult markets.
Managing Partner at Etrading Software and interim CEO of Neptune, Grant Wilson, said, “The incorporation of Neptune is the culmination of 18-months work with our consortium members across business, finance, legal, technology and strategy. We are pleased to have reached this milestone resulting in the formation of Neptune Networks Ltd. Our sponsors bring tremendous experience and a deep understanding of the challenges and opportunities facing the financial markets and we are delighted to cement the relationship with these market leading institutions and continue to drive the Neptune strategy forward.”
Formulated by Etrading Software and a group of over 40 banks and asset managers in the latter half of 2014, Neptune has continued to garner industry momentum as market participants see the benefits of collaboration within this network utility. The Project has widespread support from leading players in the market such as BARCLAYS BANK PLC, BANCO BILBAO VIZCAYA ARGENTARIA S.A., BNP PARIBAS, COMMERZBANK AG, CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, CREDIT SUISSE INTERNATIONAL, GOLDMAN SACHS INTERNATIONAL, HSBC BANK PLC, ING BANK N.V, JP MORGAN, MORGAN STANLEY & CO INTERNATIONAL PLC, RBC CAPITAL MARKETS, BANCO SANTANDER S.A., SOCIÉTÉ GÉNÉRALE, UBS AG LONDON BRANCH & UNICREDIT.