A new electronic bond trading system designed to bypass traditional broker/dealers and avoid the markups they charge to trade is looking for institutional customers, said Larry E. Fondren, chairman, owner and developer.
Known as CrossCom Trading Network and based in Berwyn, Pa., the system is designed to allow institutional investors, including pension funds, to trade directly among themselves without the use of a broker/dealer.
The system, similar to electronic equity trading systems, allows investors to match their buy and sell orders with each other. Traders establish prices by proposing prices either in absolute dollars or based on spreads to Treasury securities.
The system has Securities and Exchange Commission clearance to trade any fixed-income securities registered with the SEC, including corporate, mortgage-backed or U.S. agency, but excluding Treasury or municipal securities. Investors, besides trading directly with each other, also may use the system to trade electronically with broker/dealers, although none has signed up yet.
The system has been in test development for more than a year and is now seeking customers; Mr. Fondren, who said he invested $2.5 million in the system, is seeking $5 million in capital to provide operations support and to promote CrossCom through marketing and advertising.