MTS Prepares to Launch US Fixed-Income Platform

MTS, a London Stock Exchange Group company, has received approval from the US Financial Industry Regulatory Authority (Finra) to operate MTS Markets International as a member broker-dealer. The dealer-to-client platform will allow buy-side firms to execute European and US government, agency, mortgage, and corporate bonds trades, and access real-time prices from European liquidity pools.

"What this story is about is providing US institutional investors with the ability to trade on the platform for the first time," says Mark Monahan, CEO at MTS Markets International. "We're launching in the US, and trading in a request-for-quote manner for US and European rates and credit. This isn't a start up; what we're really doing is leveraging this exceptional European liquidity, distribution, technology and infrastructure that MTS already has, right from day one."

Cost and Regulation
Monahan points to the established brand of the London Stock Exchange as being a large benefit to the platform, which will be competing against established players in the space. More than that, however, with the increasingly globalized nature of trade in fixed income, as well as its rapid transformation to an electronic basis, he believes MTS's pedigree in European fixed income and its ability to navigate regulatory trends plays well into the eventual launch.

"The window to MTS that we'll offer the buy side is a very unique view. The interdealer prices of the 17 European markets are part of the market data that will be distributed via MTS BondVision in America, which is unique and powerful," he explains. "That's one of the things. The other area is that the market is very focused on compliance and regulation, and that plays to anyone who is fully electronic, but it plays to our strength as we're a pioneer and a leader in this space. BondVision is the only dealer-to-client trading platform in Europe to operate as a regulated exchange for government bonds as well as a regulated MTF for non-government issuance. We're regulated to the very highest standards, which can only be a help."

Looking Ahead
As MTS Markets International has only recently received its authorization from Finra as a broker-dealer, this is the first opportunity that it has had, in a legal sense, to market itself. Aiming to launch later this year, the platform is currently courting buy-side participants and persuading the European dealer base of MTS to provide liquidity for America also.

We already have a lot of major sell side players that are liquidity providers in Europe, and many of them are global, so we have to work with them to get them to do the same in the US.

"We already have a lot of major sell-side players that are liquidity providers in Europe, and many of them are global, so we have to work with them to get them to do the same in the US. We have to bring on the buy-side players, the asset managers and the pension funds," he continues. "The overriding goal is to provide the US trading community with a new, credible choice for European and US fixed income. There are dominant players in every instrument, but my opinion is that if we can offer a choice to those providers, that will be very well supported."

The Bottom Line

• MTS Markets International has received authorization to operate as a US broker-dealer, and is looking to extend its bond trading platform from a solid European base to the American markets.
• Initially, it will cover government, agency, mortgage, corporate and covered bond markets.
• The platform plans to launch at the end of the year, with streaming price data from BondVision available from European liquidity pools for the first time.