Algomi’s New CEO Eaton: ‘I Could Not Have Asked For A Better Six Weeks’
To say that the new CEO of Algomi, Scott Eaton, is a busy man is an understatement. Not only satisfied with tackling the challenges of settling into a new working environment at the fixed income liquidity matching firm, Eaton announced that Algomi has this month agreed to partner with Belgian financial services firm Euroclear. Euroclear has pledged significant investment in Algomi but their partnership will also involve a technological collaboration, with the hundreds of thousands of bonds held by Euroclear in Europe now made available to the buyers through Algomi’s ALFA price aggregation tool.
Eaton has also revealed that while the direction of the firm would not change drastically following his appointment, he anticipated a focus on augmenting the relationship with Euroclear and continuing to develop Algomi’s ALFA product for the remainder of 2018. “The very first thing we have planned for Q3 and Q4 is to continue to work with our partners at Euroclear and build that connectivity,” Eaton said. “We have that search function which will allow for their bonds to be searched for in real time. This is what we will be focusing on from a development standpoint.”
“From a slightly larger standpoint,” he continued, “we will be focusing on the ALFA product which is extremely powerful not just for bond traders, but also portfolio managers and compliance teams. We have a number of tremendously exciting meetings with the buy-side lined up. It was purpose-built to reflect exactly what an execution trader needs every day and we will continue working with Euroclear and that is a really fun thing.”
Algomi’s ALFA platform brings together liquidity data from electronic messaging platforms and dealer inventory feeds, incorporating them in one solution. Users of the platform can decide which of their bonds in custody are exposed in the database to the buy-side. In turn, those looking to purchase securities will highlight those on the platform that they would be interested in purchasing and for what price.
Should both the sell-side discover that an entity is interested in buying their bonds for an acceptable price, Algomi’s ALFA platform then signals that a match has been made. One of the key advantages of Algomi’s ALFA is that it gives the buy-side a real-time view of the entire bond market, therefore encouraging buyers to commit to sales. The platform aims to reduce the threat of a ‘liquidity drought’ in global bond markets by allowing traders to complete their transactions on one platform, rather than across several. Eaton explained that the fragmentation of trades had led to both the confidence in and the liquidity of fixed income markets suffering.
Algomi also revealed that the partnership with Euroclear will make more than 372,000 ISINs available to buyers across the continent. “I think that they are the main custodians for European bond market access and therefore will bring something really interesting to the table,” Eaton said. “I don’t think anyone else on the continent can bring this access which is totally unique.” Euroclear will join HSBC and BNY Mellon as Algomi ALFA custodians.
For Eaton, mainland Europe will remain one of Algomi’s fundamental markets for 2018. It is a region he is familiar with given his previous role overseeing business operations for Europe as the COO at MarketAxess Europe. “Europe is a key market for us,” he said. “Our partnerships with major European market infrastructure providers such as Euroclear, Euronext and SIX enable us to scale the development and use of Algomi’s powerful liquidity intelligence technology to new parts of the market. Market aggregation and analytics tool, Algomi ALFA is key for driving growth in European markets for us because it offers a holistic view of trading activity across multiple trading venues.”
Interestingly, Eaton himself comes from a legal background having studied the subject at Georgetown University in his native United States. However, following his graduation he moved to London taking up a job with the now-defunct British merchant bank, Kleinwort Benson. From his first day as a trainee bond trader, he was hooked. He quickly rose through the ranks within the industry and has held a number of senior roles at blue-chip financial firms, including the Managing Director and Global Head of Trading for Central and Eastern Europe at UniCredit and the Global Head of Trading at ABN AMRO.
“I value my law school education not because I ended up being a lawyer but because it taught me how to look at the world and analyse problems in a certain way,” he said. “When you take that mindset into the world of bond trading it is certainly advantageous looking at the market from a different original perspective. I have then worked on the traditional sell-side, ran a hedge fund and also know what it is like working with clients on the buy side. As a result, I really understand market structure and how things have evolved so these things allow me hopefully to bring a directing voice to such an excellent team as Algomi.”
He sees a long-term stint ahead for himself at Algomi and is particularly enthused about the quality of the board already in place, despite the firm only launching recently in 2012.
“It has been a very busy six weeks so far but I can usually gauge my happiness in a job by how excited or unexcited I am to get up on a Monday morning,” Eaton said. “We just have this unbelievable board here and I find that on a Sunday night I’m thinking of work in a positive way, thinking of new ideas and concepts which is a great sign. Every day so far has been extraordinarily fun and I could not have asked for a better six weeks!”