There’s a lot of talk lately about BlackRock’s 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 BlackRock’s 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 isn’t stopping there; it’s embracing electronic trading of fixed income, another way to get the liquidity it needs in a world where Wall Street is short of capital.
