BlackRock Electronic Bond-Trading Fails From Client Imbalance

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BlackRock's internal electronic bond-trading system failed because it couldn’t attract a critical mass of customers, even as small dealers stood ready to aid trading.

Bloomberg reports that among the 30 clients out of 60 that had the option to use BlackRock’s Aladdin Trading Network, the mix of buyers and sellers wasn’t diverse enough, according to Brian Beades, a BlackRock spokesman.

While the world’s largest asset manager had arranged for smaller dealers to take other sides of trades when needed, there wasn’t enough demand for that to occur, said an executive at one of the dealers who asked not to be named for fear of retribution.

Firms from BlackRock to Goldman Sachs have sought to build up electronic trading systems as Wall Street dealers that traditionally acted as middlemen by warehousing bonds cut the amount of debt they hold amid tighter rules on capital and risk-taking. BlackRock, which manages $3.9 trillion in assets, said April 23 it instead would route trades through MarketAxess' electronic system.

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BlackRock Electronic Bond-Trading Fails From Client Imbalance

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