October 15, 2015 / 5:33 PM / 2 years ago

EMBonds launches dedicated electronic emerging debt trading platform

LONDON, Oct 15 (Reuters) - Electronic trading platform operator EMBonds launched a platform for trading emerging market bonds on Thursday, it said, in a bid to counter the shrinking liquidity which has dogged the sector.

The EMBonds platform, officially launched after five months of preliminary operations, will offer trading of sovereign and corporate bonds - both in local and hard currency - from eastern Europe, Middle East and Africa, founders Mehmet Artun and Kerim Acanal said.

“Trading has already started, there are a number of market makers putting prices on the screen,” Artun, EMBonds CEO, told Reuters. “It’s still early days, our first step is to establish the platform in the CEEMEA region and then expand to other emerging markets.”

The client list for the platform which is regulated by the UK’s Financial Conduct Authority (FCA) includes emerging market banks, international banks and global asset management firms, according to the statement. It will be based in London and Istanbul.

Emerging debt trading has been hit by a collapse in day-to-day trading volumes and widening bid-offer spreads, a casualty of a liquidity crunch caused by tighter bank regulation after the 2008 crisis.

In recent years, market makers who facilitated trading by holding securities on their own books and displaying bids and offers, have all but vanished as new rules made it costlier for them to hold riskier assets on their balance sheets.

“By bringing many liquidity providers together, EMBonds aims to grow liquidity at a time traditional market middlemen are shrinking theirs,” EMBonds said.

Artun declined to name platform participants, but the company’s statement included comments by Stephane Malrait, ING Bank’s head of electronic trading, and Mohammed Grimeh, head of financial markets for the Americas at Standard Chartered.

“Our market makers are local (emerging market) banks predominantly but we also have several global banks as market makers,” Artun said.

The venture is backed by the International Finance Corporation, which is the World Bank’s investment arm, and investment firm Earlybird Venture Capital.

Prior to founding EMBonds, Artun was head of external EM debt trading at Deutsche Bank while Acanal was a macro portfolio manager at Pharo Management. He also was head of CEEMEA local debt at Lehman Brothers, the bank which collapsed in 2008. (Reporting by Sujata Rao; Editing by Hugh Lawson)

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