Theres a lot of talk lately about BlackRocks
plans to cut out the Wall Street dealers by crossing its own
trades as well as those of clients that use technology
platforms from its BlackRock Solutions arm.
But the discussion is missing the larger story of changes that
are taking place on Wall Street as a result of new regulations
and deleveraging after the 2008 financial crisis.
In December 2011 Institutional Investor ran a major
feature on BlackRocks plans to protect itself and its
clients from changes in the markets, particularly the bond and
credit markets. BlackRock, as with all managers that oversee
assets on behalf of pension plans and other investors, needs to
buy and sell securities easily, but banks have been pulling in
their horns in recent years. Crossing trades, which has
generated all the buzz, is just part of the story.
Even more important, BlackRock is taking a seat at the table
with banks and issuers, helping them design bond offerings and
advising on deals. No longer does it want to just pick from
what Wall Street is shopping, it wants to orchestrate the wares
on display. BlackRock isnt stopping there; its
embracing electronic trading of fixed income, another way to
get the liquidity it needs in a world where Wall Street is
short of capital.