Credit Suisse First Boston has become the eighth international investment bank to join asiabondportal.com, a multi-dealer online trading system for Asia-Pacific bonds. The announcement comes just days after the bank confirmed it had become a shareholder in rival BondsInAsia, which is due to launch the first of its electronic trading franchises later this year. CSFB is the first global dealer that has committed to supporting asiabondportal.com without taking an equity stake in the business.
Asiabondportal.com says its year-to-date trading volume has reached $120 million -- over 90% of which came in the months of May and June. Chief operating officer Tom Holland says the dramatic increase is because the trading system has proved itself since its launch last October, and has achieved a critical mass of support from the buy side and dealers.
"We went out and focused on getting more firm prices up there from the dealers and now we're getting more non-interested parties trading. We're seeing one to four deals done per day, with the best day so far hitting $8 million," says Holland. "Around 40 institutional investors have signed in for trading accounts and well over half have used or tested the trading platform."
A breakdown of the volume sees a lot more investment grade bonds going through, he adds, although there are a small amount of lower grade credits, PLDT for example, being traded.
CSFB has become the second international investment bank to commit to relationships with both asiabondportal.com and BondsInAsia. Deutsche Bank owns an equity stake in both initiatives.
Neither of the bond trading platforms have revealed the terms of their agreements with dealer participants, although BondsInAsia CEO Albert Cobetto says his shareholder banks have committed to dealing with a certain minimum number of clients through the platform. CSFB and Deutsche will presumable use either platform depending on client preference, or available instruments.
"Our participation in asiabondportal.com demonstrates CSFB's commitment to electronic trading and the benefits that this brings to our customers," said Jim Healy, global head of emerging markets at Credit Suisse First Boston.
Asiabondportal.com says it expects volume to grow further as global interest rates continue to fall, more Asia-Pacific companies sell new bonds and as securities denominated in a greater variety of currencies become available on the website.
Asiabondportal.com currently includes G3 currency denominated bonds (Asian bonds denominated in US dollars, euro or yen) as well as Singapore and Hong Kong-dollar bonds.
Since Australia's Commonwealth Bank took a stake in the portal in May, the company has developed research and a database of Australian domestic and Kangaroo bonds (foreign companies issuing in Australian dollar). Holland says the company will start trading as soon as the regulatory issues are worked out. A similar situation exists with its plans to start trading in ringgit, baht and rupiah domestic currency bonds.