A $500 billion investor developed 'cutting edge' technology, and now it's sharing it with rivals

pulse

May 16, 2017 2:36 PM

The bond market has exploded in size and complexity, which makes life difficult for investors looking to make big trades.

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Picture this: you're trying to buy a used car, and you're having difficulty.

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asset manager that oversees $498 billion, developed a solution to all this chaos.

AllianceBernstein is also taking an undisclosed minority stake in Algomi and a seat on the board.

"It puts all that information at your fingertips, so you can make an informed decision," Tim Morbelli, , told Business Insider last year. "All these different venues are trying to solve that issue of liquidity, but liquidity doesn't necessarily make you more efficient. Efficiency can help generate more liquidity, however."

That approach has had a real impact on trading costs.

Analysis has shown that all-to-all trading delivers better pricing than trades placed with dealers, according to Morbelli, with AllianceBernstein saving 4.5 basis points on average on the bid-offer spread, or the spread between where buyers

It adds up.

AllianceBernstein started showing the ALFA system off to other investors last year. The fund manager had a competitive advantage thanks to the ALFA system, so why not keep it under lock and key? Because AllianceBernstein, like everyone else, is tired of hearing about tough trading conditions.

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