NEW YORK, Aug 24 (Reuters) - Liquidnet will launch its corporate bond trading "dark pool" at the end of September and so far has 120 U.S. firms, representing ownership of 50 percent of the asset class, lined up to start using the private trading venue, the head of the company said on Monday. Liquidnet, which usually connects fund managers seeking to trade big blocks of stock anonymously, had aimed to have 60 to 70 firms signed up before the launch, but already has double that amount in the United States alone, Chief Executive Officer Seth Merrin told Reuters. The New York-based company said it had not yet finalized the number of European firms signed up. Electronic trading platforms are rushing to fill the gap in the over-the-counter debt market that was long dominated by big banks, which have scaled back their bond dealing in response to post-crisis rules that make such activity more expensive. The pullback by banks has raised concerns about a liquidity crunch when U.S. interest rates begin to rise and the market heats up. New venues such as Liquidnet's, which will trade U.S. high yield bonds, European high yield bonds, and European convertible bonds, hope to help ease that situation by directly connecting pools of potential buyers and sellers. Merrin said his venue is going to be the only dark pool venue for corporate bonds that has a critical mass of asset managers signed up to post their liquidity. "This is bond trading nirvana," he said. "We are introducing for the first time, the centralization of corporate bond liquidity." Merrin said that Liquidnet recently did a test run of its new fixed income dark pool in Europe with just 28 firms and found it was able to match between 5 percent and 10 percent of the bonds posted. Dark pools are anonymous trading venues where pre-trade information is kept secret. Members of Liquidnet's fixed income dark pool will only see available liquidity when it matches the orders they themselves have posted and is within a price and size range they have indicated they are willing to accept. (Reporting by John McCrank; Editing by Matthew Lewis)
Liquidnet has said that 120 US firms have signed up to the corporate bond trading dark pool, that it plans to launch at the end of September, double the amount it targeted. Liquidnet's core business focuses on anonymously connecting fund managers looking to trade big blocks of stocks, which it is looking to mimic in the bond market as post-crisis rules have forced bond trading to migrate from trading OTC.