[ By Howard Haykin ] Goldman Sachs has been working on its new electronic trading platform, GSessions, for the past year, and now is planning to launch the system this month.  While the firm has publicly public announced any details about the system, the Wall Street Journal nonetheless reported the initiative on its website late last Thursday. The move comes 3 weeks after BlackRock, the world’s largest money manager, said it was planning its own bond-trading platform - called Aladdin Trading Network - that would allow clients to bypass Wall Street firms, such as Goldman Sachs.  Last year, Goldman Sachs’s revenue from market making and principal investments in credit, including corporate debt and derivatives, fell to $2.72 billion from $8.68 billion in 2010, according to a regulatory filing. Regulatory Challenges. In addition to competition from rivals, the profitability of Wall Street firms is being challenged by regulations that require they hold more capital as a buffer against potential losses from assets such as corporate debt.  A U.S. law that seeks to prohibit federally insured banks from making bets with their own money may also hinder lenders’ ability to commit money to buy securities from clients, according to analysts like Sanford Bernstein's Brad Hintz. Fixed Income. In presentations over the past two years, Goldman Sachs executives have said the firm succeeded in developing electronic trading capabilities in the stock and currency markets and were also preparing for a higher percentage of fixed-income trading becoming computerized. "Connectivity with clients and what we call owning the desktop is going to be very, very important," Chief Financial Officer David A. Viniar said in a presentation in February 2011.  "Having those capabilities, having first-mover advantage, we think is going to be key coming out after the new regulations." GSessions will start by offering two 5-minute trading sessions a day, one in an investment-grade bond and another in a high-yield, high-risk security, the person said. Speculative- grade, or junk, bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s. At the start of each session, Goldman Sachs will post a bid and offer price and notify clients of the maximum amount of liquidity the firm is willing to provide to fill orders, according to the person. Acting as Counterparty. Rather than matching trades between clients, Goldman Sachs will act as the counterparty to all trades and collect the spread, or difference, between the bid and offer prices, the person said. That gap will be lower than what Goldman Sachs earns on non-computerized trades, the person said. Likewise, BlackRock, which awaits SEC approval for its system, reported in April that its Aladdin Trading Network would lower  trading costs for customers.  And MarketAxess Holdings Inc.’s electronic trading system for U.S. and European investment-grade, emerging markets and other types of bonds said last month that it had a record $58.7 billion of transactions in March.  Other electronic trading systems for fixed income include Tradeweb Markets LLC and Bloomberg LP, parent company of Bloomberg News.   [Bloomberg, 5/4/12]