Baker Tilly FAS (Thailand) has announced plans to manage a new e-debttrading platform, which will offer distressed debt players a web-based platform to buy and sell distressed loans via an open tender process. The firm, traditionally known as a specialist restructuring establishment and accountancy/auditor, has been introducing the concept at presentations in Bangkok, Singapore and Hong Kong. It says it decided to move into the online trading market after witnessing numerous inadequacies in the current approach to debt trading.
Presently, the new platform will concentrate on the Southeast Asia region, but the firm will also use its Hong Kong office to assist with marketing to China.
According to the firm, the technology provides both buyers and sellers with access to the full debt trading market without the complications and time constraints associated with self-execution. Upon rollout, Baker Tilly FAS stresses the e-debttrading product will widen the distressed loans market and could potentially increase the number of buyers into the market by close to ten-fold.
"Right now there are about five to seven major players on each deal and we believe the market could expand to about 50," says John Ginnane, director, financial advisory services, Baker Tilly Thailand. "The e-debttrading platform presents a transparent opportunity to buy and sell debt, whereas previously the process has been messy."
In addition to growing the size of the debt buyer and seller market, trades are expected to become more transparent. As with most online trading portals, confidential security is a key feature, with Baker Tilly FAS staff not at liberty to disclose information about the parties involved in any given trade. Registration will be closely monitored to ensure good corporate governance and perhaps most importantly, the 10bp fee payable upon settlement will be below the current buyers market that charges between 15bp to-above 30bp.
To help launch the platform, registration fees for any debt traders joining between now and 31 March will also be waived. The service will also be free to debt sellers.
Other advantages of the e-debttrading platform, which is supported by the Bank of Thailand, will include a general anonymity function - with only a successful bidder privy to the seller's identity. The platform will also feature electronic processing and a historical price referencing option offering portfolio valuation, audit and setting reserve price functions.
Baker Tilly FAS will only will act as an intermediary throughout the trade by completing a corporate check to ensure validity and through a registration-only policy, assuring the security of the transaction.
"Our intention is not to re-invent the wheel, but simply to centralize a fragmented market and bring transparency to this market at a time when corporate governance is paramount in business," says Ginnane.
The firm decided to launch the platform in Thailand because of its central location and if all goes to plan, it anticipates a live launch in late February/early March.
