Intercontinental Exchange (ICE) is continuing its push in fixed income as the exchange operator hailed double digit growth in connection to its BondPoint platform and outlined plans to integrate the recently acquired TMC Bonds business.
Speaking to investors and analysts on the exchange’s second quarter earnings call, ICE’s executive team revealed that there has been an increased demand for access to BondPoint with volumes up 33% so far this year.
Benjamin Jackson, president at ICE, explained that TMC Bonds will be integrated with BondPoint to form a unified business: “The way to think of those two businesses as a combined entity is that it’s approximately $100 million business with $40 million in operating profit and there’s significant growth opportunity for both,” he said.
Jackson added that one specific area of growth seen on the BondPoint platform and TMC is in odd-lot trading, trades with more than 100 bonds per trade, which grew by more than 50% in the first half of the year.
ICE acquired BondPoint from Virtu Financial for $400 million last year after the market maker’s $1.4 billion merger with KCG, fighting off competition from other major bond players including MarketAxess and Tradeweb.
Then, last month, ICE completed its acquisition of fixed income trading venue TMC Bonds, owned by investment banking giants Bank of America Merrill Lynch, Citi Global Markets and Morgan Stanley, for $685 million.
After engaging with fixed income traders and asset managers, ICE then emphasised that it expects the automation of fixed income trading from voice to request-for-quote (RFQ) protocols to continue, particularly for larger-sized trades.
“The phone is no longer an option for the high volume, smaller trade size, as a result of fixed income market structure changes that have fragmented inventory. So, the efficiency in executions that [BondPoint and TMC] provide is being embraced by the buy-side, the sell-side, corporations, and wealth advisors,” Jackson said.
“BondPoint and TMC are also very complementary… Each began by catering to wealth managers, market makers, and the buy-side, but over time, this audience has expanded to include sell side and corporates.”
ICE expanded its fixed income focus even further last week after announcing plans to develop a fixed income exchange-traded fund (ETF) platform alongside BlackRock. The platform will be connected to both BondPoint and TMC and will look to remove inefficiency and friction in the fixed income create/redeem process.