Trading Swarms, in the news

Trading Swarms

TruMid’s business model relies on hosting short bursts of trading for the bonds it offers. Instead of a continuous market for each security, TruMid will run what it calls “swarms,” or brief sessions when asset managers and dealer banks can come together to buy and sell a particular bond. By advertising the bonds it intends to offer beforehand and then giving investors a limited window, TruMid hopes to focus attention on securities that trade far less frequently than stocks.

TruMid will focus on investment-grade debt valued at a minimum of $3 million and high-yield, high-risk bonds over $2 million. Buying and selling the largest bonds largely remains a process conducted by telephone, as it has been for decades despite the rise of electronic trading in other asset classes.

It’s been tough to persuade traders to shift to electronic platforms in part because of concerns about “information leakage,” or tipping off rivals to their plans.

“That information leakage, in terms of showing your hand, can drive the price away from you dramatically,” said Chris Murphy, co-head of currencies, rates and credit at UBS Group AG’s investment bank.

I dunno, yet, still thinking.