BondsInAsia goes live

After months of system testing and test trades, the electronic bond trading platform is launched for real.

BondsInAsia (BIA), the regional electronic trading platform for fixed income securities, has begun live trading with open access having been made available to institutional dealers and investors. The official launch saw live trades in the first three BIA markets: Hong Kong, Singapore and the G3 currencies (US dollar, yen and euro).

Up until recently, trades had only taken place between the platform's five shareholder banks: BNP Paribas, Citibank, CSFB, Deutsche Bank and HSBC. Prior to this, a number of dummy trades were conducted to ensure the electronic system was reliable.

In the last month, three new partners have also been added to the dealing group. Barclays Capital will participate in all three markets, Hang Seng in Hong Kong and DBS will be active in Singapore.

Albert Cobetto, chief executive officer of BIA, says that a wide range of securities was already being traded, although he comments that it is a little early to speak about volumes.

"We are seeing the entire spectrum of securities being traded in each market, from government paper to corporate bonds," he states. "In terms of volume, that will be hard to project for a few months because banks have to go through the documentation process. What I can say is that we will see activity increasing from now till the end of December and we expect things to really pick up in the next year."

However, in FinanceAsia's poll of fixed income investors published this month, the results suggested that there has been a shift of investor sentiment away from online trading. In the same poll for 2000, 60% of participants thought they would use an online portal within the next year. Twelve months on, and that number had fallen to 34%, with only 15.5% saying they would be very likely to use such an electronic trading platform.

But Cobetto believes interest in the platform has remained strong and fully expects that BIA will become a fundamental tool for investors and banks.

"I'm not sure whether those investors were thinking about systems that are actually geared more to trading like BIA, because we're seeing these platforms become very successful in the US," says Cobetto. "The figures may have been influenced by the events of September 11, when the initial mood was very negative and people were being very cautious.

"But if you look at activity in the last couple of months, there has been a shift in the markets and things are very active in the fixed income sector," he adds. "Investors are very interested in the BIA system and we think it will have an impact. We think we will see a lot of volume on the government side and then with corporate bonds. This system has the capacity to allow investors and dealers to trade all fixed income securities."