The path forward
The drawbacks of CLOB protocols and some of the shortcomings of RFQ have become increasingly visible in recent years, leading to innovation in trading technology and the evolution of the market structure for the US Treasury market.
Through our flexible peer-to-peer model, at LiquidityEdge we are looking to capitalize on the growing influence of market making PTGs, and the advanced internalizing e-trading groups at the primary dealers, to create a new method of liquidity provision through the platform. These providers stream liquidity bilaterally or into bespoke pools to consumers they wish to price to on their own terms. The consumers also benefit from being able to create their own customized pool of liquidity with those they choose to interact with.
We provide a private trading network that minimizes information leakage and market impact by publishing data only to the participants of the trade, and enabling them to customize price streaming amongst a known and trusted network of counterparties. No market data is published, so the opportunity for gaming and toxic trading strategies is eliminated. This peer-to-peer model allows all types of participants to interact and trade with each other, leading to providers comfortably showing larger sizes and tighter prices, while eliminating the winner’s curse.
By fostering a healthier trading ecosystem, in which liquidity providers and consumers can work through large orders efficiently without fear of falling victim to disruptive trading strategies, this innovative model re-introduces trust and confidence in the market which has been negatively impacted by signal risk and information leakage.