Bond MTF Vega-Chi Set to Go Live

The new venue, whose trades will be cleared by BNP Paribas, "combines fixed-income and equity volatility, price spreads and risk for interest rates-a lot of variables," says Constantinos Antoniades, CEO of Vega-Chi. "Convertible bonds are affected by the changes in equity price, credit spreads and other variables," he adds.

Vega-Chi aims to improve the efficiency of convertible trading, since "there are 15 different dealer-run crossing networks that have created an inefficient market structure," says Antoniades, who has previously spent 11 years working in the fixed-income business at Goldman Sachs. "One of the reasons I started this business is because of the inefficiencies I saw in the convertible bond market. This is a big opportunity for platforms like Vega-Chi to aggregate liquidity in a way that provides more transparency and better historical data."

The platform's gray market trading feature is new, say officials. "The gray period is when an issue is announced but not the bid price," says Antoniades. "We see very heavy trading in this period on our system, usually within a few minutes of announcements of a new issue on our system."

Vega-Chi's backers have spent the last two years preparing to launch the business and the last 18 months developing the proprietary software that powers the MTF and the associated infrastructure.

"What is different about our technology compared to typical alternative trading systems (ATSes) is that we provide plug-and-play technology so the user does not have to develop anything from their side," says Antoniades.

The MTF is constructed using client-server architecture with traders using a Windows-based client and the matching engine running on Linux servers.

Clients seeking to develop their own interface to Vega-Chi can do so via an application programming interface (API) for Microsoft Excel.

Vega-Chi has located its servers in two London datacenters, Telehouse North and Telecity Harbor Exchange.

When Vega-Chi launches, it will initially focus on the European bond market, says Antoniades. "We will list Asian convertible bonds a few weeks after our European launch," he adds.

Tanzeel Akhtar