Neptune Networks Looks to Expand into MBS/ABS in the US

Neptune currently has 24 banks live on its platform with two more set to go live by early in the second quarter, Byron Cooper-Fogarty, the firm’s head of sales, tells WatersTechnology. At the start of 2017, it only had 16 banks live. It also has 55 buy-side firms with about $22 trillion under management signed on, according to Cooper-Fogarty.

While the company started in London with a focus on the euro and sterling, in the past year it has seen strong growth in the US, helping to expand the network from about $80 billion daily gross notional from 18,000 axes on the platform in January 2017, to $170 billion daily gross notional from nearly 40,000 axes, today, he says.

“Last year, we saw the dollar component of the platform take off and that’s thanks to the likes of BAML, Citi, JPMorgan and those guys switching on the New York desks,” Cooper-Fogarty says.

While credit is Neptune’s core business, it has seen strong growth in high-yield, emerging markets and rates, he says. Going forward, Neptune will look to expand into mortgage-backed securities (MBSs) and asset-backed securities (ABSs).

“We’re looking to add MBS and ABS, as well, which I think is particularly pertinent to the US,” Cooper-Fogarty says. “Discussions I’ve had on my trips to the US to visit clients is that these are asset classes that are screaming out to have someone like Neptune to standardize and make for a far more efficient process. It’s a massive market but the way that information is discriminated is still not particularly high-tech.”

Cooper-Fogarty says that “a huge amount of data gets distributed through a spreadsheet,” which can create time-limit problems and prevents traders from using the data in a systematic fashion. Additionally, it’s challenging to search and find information when it’s in spreadsheet form. He says that while real-time FIX feeds, like there are in credit, might be “a step too far” for MBS, he envisions at least allowing users to convert spreadsheets into FIX messages so people can search and find data more easily.

With that put in place, the industry could then begin a second phase of trying to make the data “more real-time like in the credit marketplace,” he says.

Cooper-Fogarty says Neptune has about six to eight other banks in its pipeline that it hopes to add soon, and will look to continue to expand its buy-side presence. In that effort to reach more buy-side firms, in November, Neptune embedded Symphony’s chat functionality within the Neptune Network with the goal of enhancing communication channels for buy-side investors seeking bond axe and inventory data from the sell side.