By Bradley Hope And Katy Burne 

Investment Technology Group Inc. is jumping into the race to solve one of the trickiest problems for big investors: finding a better way to trade bonds now that banks have stepped back from the business.

The New York-based brokerage and technology firm said Wednesday that it is planning to launch a trading venue known as a dark pool, a private platform in which buyers and sellers remain anonymous. While most bond trading takes place over the telephone between dealer banks and customers, ITG and a host of others are trying to tap into increasing demand from fixed-income investors to trade more cheaply and through electronic networks.

The credit market has, until recently, resisted the incursion of fully electronic trading more so than markets for currencies, stocks and some derivatives.

Similar efforts by firms such as Goldman Sachs Group Inc. and BlackRock Inc. have faltered, but ITG is betting it can leverage its track record in stock trading and technology to make inroads into credit markets. One of its chief rivals, Liquidnet Holdings Inc., announced in March it would open its own credit-trading network in the fall.

Liquidnet didn't immediately respond to a request for SHYcomment.

Goldman and BlackRock still operate their platforms.

ITG is starting with a test version of the venue, called Posit FI, in October, and it will become fully operational as a dark pool by the end of the year. It goes up against roughly a dozen electronic-trading venues for bonds trying to cash in on what financial institutions expect to be a lucrative transformation in the $10 trillion corporate-bond SHYmarket.

The venue will allow investors to trade bonds using frequently updated prices.

"Investors have complained to us about the difficulty trading bonds and transparency in pricing," said Jamie Selway, managing director at ITG. "We think this is going to solve some of those problems and add SHYliquidity."

Still, some see hurdles ahead.

The idea of using dark pools for bond trading is sound but the practicalities of getting it off the ground are hard to surmount, said Anthony Perotta, head of fixed-income research at Tabb Group.

"I don't think, at this point, there will be enough situations where there is another side of a trade," he said. "When you're selling, there's probably a reason you're selling, and your like-minded brethren are doing the same."

Since the financial crisis, investors have said it is increasingly difficult and expensive to quickly trade bonds, especially in large sizes.

Large trades start at about $1 million in bonds and market-moving-size trades from about $5 million. ITG is focusing on handling trades between those amounts.

Investors blame the problem on a pullback by dealer banks that traditionally acted as middlemen in the market. Dealer banks have scaled back their fixed-income trading because of stricter capital requirements imposed by regulators after the financial crisis.

"There is so much fragmentation in the corporate-bond market, and dealer inventories are going down," said Chris Rice, global head of trading at State Street Global Advisors in Boston. "We're interested in any way we can to create links in the bond ecosystem that will increase the efficiency of trading."

Analysts have pointed to the potential for growth in the electronic trading of bonds. Among the options for credit markets are dark pools, which have become a force in stock trading over the past decade, accounting for roughly 14% of all trades, according to Tabb Group.

ITG ultimately hopes to draw on an approach it has taken in stocks by directly tapping into the order-management systems of traders to let them know when there are willing sellers or buyers in the market for specific bonds.

Change in the bond market has been slower than anticipated, however, causing some previous efforts to sputter and startups to be gobbled up by better-capitalized or more-established platform providers.

ITG's approach is probably slightly early in the market's evolution, said Frank DiMarco director of fixed-income electronic brokerage at ITG. But he said investors are looking for ways to trade more actively ahead of an expected rise in interest rates next year.

Posit FI has some of the features investors have found useful in other attempts, including allowing firms to trade either on prices broadcast regularly throughout the day or in predetermined time slots or sessions, similar to the GSessions platform brought to market by Goldman Sachs.

Many investors ultimately felt GSessions and other single-dealer-owned systems wouldn't put their own interests first and have pushed for an independent solution. Goldman Sachs declined to comment.

Others that have pursued channels to facilitate investor-to-investor trading include MarketAxess Holdings Inc., which handles much of the electronically traded corporate bonds in the U.S.

The ITG system also proposes to offer customers prices updated every minute on 14,000 corporate bonds, of which less than half would be for securities that don't frequently trade. That pricing information is seen as helping juice trading by customers who are used to calling around dealers for prices before they make a transaction.

The pretrade pricing effort comes at a time when the Securities and Exchange Commission wants to make prices on both municipal and corporate bonds more widely available to SHYinvestors.

ITG has been in talks with a few dealers about participating on the platform, but the company said it doesn't view their involvement as critical, because the goal is to bring customers together in an environment that is cost-effective even without dealers.

Write to Bradley Hope at bradley.hope@wsj.com and Katy Burne at katy.burne@wsj.com

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