Expand your network. Find the other side of the trade

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Expand your network

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SIX Corporate Bonds is

the new credit trading

platform by SIX that

allows credit traders to

efficiently source liquidity

in large ticket sizes with

minimal information

leakage to the broader

market.

Designed in consultation with head credit traders from a number of

large international investment banks, this dealer-to-dealer (D2D) trading

model complements existing trading practices, automates the search for

liquidity, and optimises the opportunities for timely and efficient

match-ing. SIX Corporate Bonds is a multilateral exchange like corporate bond

trading platform that is domiciled in Switzerland and regulated by the

Swiss Financial Market Supervisory Authority, FINMA.

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Indicate.

Match.

Trade.

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Your advantages at a glance

Indicate

Participants may anonymously submit Indications of Interest (IOIs) to the SIX Corporate Bonds platform. Where in-ternalisation of client orders is not op-timal, SIX Corporate Bonds offers an al-ternative for sourcing liquidity, ensuring the best use of the participants’ balance sheet.

Match

SIX Corporate Bonds seeks to anony-mously match trading interests syste-matically against active IOIs from other participants. Where needed, historical trades in the same bond are also sear-ched to identify potential contra-interest. Variable matching logic can be selected to allow participants to expand the se-arch to a broader range of similar bonds, thereby providing more choice to the end-client. This innovative use of tech-nology complements the current dea-ler-to-dealer trading model, whilst sys-tematically optimising the search for liquidity across market participants.

Trade

When SIX Corporate Bonds identifies potential matching opportunities, the counterparties to those IOIs are anony-mously invited to negotiate price and size for a trade. When a trade is con-cluded, it is possible for other partici-pants with an interest in trading that in-strument to add volume for execution at the traded price, thereby optimising the volume executed once a price has been agreed.

Efficient

SIX Corporate Bonds automates and op-timises the current dealer-to-dealer se-arch for liquidity. By systematically and continuously searching active and histo-ric trading opportunities across the plat-form, participants are ensured timely no-tification of opportunities to trade their positions. SIX Corporate Bonds gives participants a new, alternative source of liquidity.

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Algomi Synchronicity Upgrade – window to initiate Curtain Time or immediate Market Session

Algomi (ISV)

ION gateway – Market Session window

MACD Trader GUI (ASP) ION Trading (ISV)

MACD Trader GUI – window to initiate Curtain Time or immediate Market Session

Participants

have a number

of options

for connecting

to the SIX

Corporate Bonds

platform.

The interface to SIX Corporate

Bonds uses FIX 4.4 which is

standard infrastructure across

dealing rooms worldwide.

Off-the-shelf solutions can be

provided by well-reputed trading

technology providers such as

Algomi, ION and MACD.

Alternatively the interface

specification allows participants

to integrate SIX Corporate Bonds

directly into their in-house rading

systems.

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Innovative trading model

Six phase trading model

Trading session

IOIs Notification Curtain Time _SessionMarket _Work-upPrivate _Work-upPublic

IOIs

Participants enter non-binding IOIs on an anonymous basis.

Notification

Participants with matching IOIs are notified and invited to a trading session. Curtain Time

During the Curtain Time, participants firm up their IOIs to quotes as the basis for further negotiation.

Market Session

In the Market Session, participants ne-gotiate price and size.

Private Work-up

In the Private Work-up, the two partici-pants of the initial Market Session are offered the opportunity to trade supple-mentary volumes at the already agreed price.

Public Work-up

In the Public Work-up, other participants with potential interest to trade that in-strument are invited to execute further volume at the already agreed price.

The SIX Corporate Bonds trading model has been developed

in collaboration with head credit traders from a number of

international investment banks. The model is based on existing

dealer practices, optimised to systematically and continuously

search for matching opportunities.

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The participants submit their corporate bond Indications of Interest

(IOIs) to the SIX Corporate Bonds platform. IOIs can be uploaded

individually or in bulk. IOIs are anonymous, they are not displayed

and cannot be seen by other participants on the platform.

Indications of Interest (IOIs)

Window to enter IOI incl. the relevant information

MACD Trader GUI (ASP)

– IOI’s are not binding. Participants IOI’s are used as the basis for the intelligent matching logic of SIX Corporate Bonds to flag potential trading opportunities.

– A participant can choose between matching against the exact bond or suggested alternatives (variable match). – Cash or spread trading configuration is defined as part of the reference data of each individual bond.

Trading session

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Trading session

IOIs Notification Curtain Time Market _Session _Work-upPrivate _Work-upPublic

– IOI’s are not actionable until price and size are firmed up in a trading session.

– Historical trades (the last two executed trades) in a given instrument are used to identify potential trading inte-rest if there are no active IOIs in a given bond on the platform.

When SIX Corporate Bonds identifies a potential contra-interest for the

IOI that participants have entered, it automatically notifies the owners of

those IOIs.

Notification

Confirmation message of live and historical match on same bond

Should participants agree to proceed to the next stage, a trading session is initiated where the price and size can be firmed up. Should there be no active IOIs in

a specific bond, SIX Corporate Bonds uses historical trades (the last two executed trades) in that bond to identify potential matching opportunities.

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– IOI’s are not actionable until price and size are firmed up in a trading session.

– Historical trades (the last two executed trades) in a given instrument are used to identify potential trading interest if there are no active IOIs in a given bond on the platform.

The first participant to act on a potential match

becomes the initiator of the trading session.

Curtain Time

MACD Trader GUI (ASP)

Window to enter price and size, initiator to choose between Curtain Time and Market Session

Trading session

IOIs Notification Curtain Time Market _Session _Work-upPrivate _Work-upPublic That participant may create a mini auction (Curtain

Time) when other interested parties can firm up their IOIs to quotes, creating a pool of competing prices in

that instrument. Once Curtain Time finishes, the most competitive firmed up price is then promoted to a bilateral negotiation with the initiator (Market Session).

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– Negotiation takes place within a preset time frame, after which the negotiation will lapse.

– Where prices cross, or if both participants have selected “Meet at mid”, the execution will happen at mid-point. – Upon successful completion of a trade, name give up is immediate to both parties.

Prices are bilaterally revealed only to the two par-ticipants in the Market Session. Only the lower of the two sizes is displayed, so the lower size interest is not aware of the total volume of the higher size participant. Once the two participants prices match, the trade is executed and the two partici pants

proceed to the next stage, Private Work-up. If agreement is not found on price, the Market Session lapses and the partici pants’ enquiry reverts to its prior IOI status. SIX Corporate Bonds uses sophisticated anti-gaming logic to prevent misuse of the negotiation process.

Market Session

Participant buying a bond

Participant selling a bond

Once both participants have firmed their quote, they enter a

bilateral trading session where they can continuously fine tune

their price and size in an attempt to match their positions.

Trading session

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Trading session

– The minimum incremental size in a Private Work-up is 1 million. – The Private Work-up takes place within a preset time frame.

– The participant with unfilled volume gets time priority in the next phase of the trading session, the Public Work-up.

Upon successful completion of the initial trade in the Market Session,

the two participants have the option to add more volume with the same

counterparty at the same price in a Private Work-up. If both participants

submit more volume, the smaller of the two sizes matches

automati-cally at the prearranged price. This process continues until one or other

side has exhausted their available trading volume.

Private Work-up

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Trading session

– The minimum incremental size in a Public Work-up is 1 million.

– The smaller of the matchable amounts is executed. Matches are made on a time priority basis.

Once the initial bilateral trade and the associated Private Work-up have

been concluded, other SIX Corporate Bonds participants with an

inter-est in trading that instrument are invited to submit additional volumes

for execution at the same price as the initial execution.

Public Work-up

Bond market overview – information on Public Work-up

Candidates to join the Public Work-up are identified using active IOIs and the prior two trades in that instrument. There is no obligation for the initial parties to the trade to

participate in the Public Work-up phase. However, should a party to the initial trade proceed to the Public Work-up with additional volume, they get priority for execution.

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Notice to U.K. persons: This document is directed only at persons having professional experience in matters relating to investments, as defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, and to others to whom it can lawfully be distributed, in the United Kingdom. Persons who do not have professional experience in matters relating to investments should not rely on it and any other person should not act on such information. The investment services described in this document are only available to investment professionals in the United Kingdom. The information given in this document is provided for information and discussion purposes only. This is a working document outlining the service of a new corporate bond facility. None of the information contained herein constitutes an investment advice or guidance for investment or other decisions, or an offer to purchase or sell a financial instrument traded on SIX Corporate Bonds AG or on any other facility. SIX Corporate Bonds AG provides no warranty and assumes no liability for the accuracy or completeness of said information or for any damages of any kind whatsoever arising directly or indirectly from actions taken on the basis of information contained in this document. SIX Corporate Bonds AG is a joint-stock company under Swiss law wholly owned by SIX Swiss Exchange AG that operates an exchange-like organisation authorised and supervised by the Swiss Financial Market Supervisory Authority FINMA. SIX Corporate Bonds AG (FRN: 707440) is an appointed representative of Kession Capital Limited (FRN: 582160) which is authorised and regulated by the Financial Conduct Authority in the UK. © SIX Corporate Bonds AG. All rights reserved.

Further information

Bond universe supported

SIX Corporate Bonds supports trading of large ticket sizes (minimum 2 million of the respective currency), in European financial and non-financial credit deno-minated in EUR, GBP and USD. Partici-pants can expand the universe of sup-ported bonds by requesting specific bonds to be included on the system. Settlement

Settlement is on a bilateral basis.

Reporting

Executed trades automatically fulfil the reporting duty.

Publication

Further, the SIX Corporate Bonds web-site will publish volume and price of trades executed on the platform (T+3).

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SIX Swiss Exchange Ltd

15 Appold Street London EC2A 2NE United Kingdom T + 44 207 864 4335 [email protected] www.six-corporate-bonds.com © S IX S w is s E xc ha ng e L td , 0 4. 20 16