By REUTERS
Singapore Exchange Ltd (SGX) has launched SGX Bond Pro, a trading platform designed to link buyers and sellers of Asian corporate bonds as exchanges rush to grab precious market share in the last global region to embrace electronic trading.
Describing it as the first over-the-counter Asian bonds trading venue, SGX said in a statement on Thursday the platform would seek to provide enhanced protection for institutional investors and encourage larger trade sizes.
The exchange said SGX Bond Pro had begun operations trading Asian corporate bonds in US dollars, Japanese yen and euros, with Asian currencies expected to follow.
Corporate bond issuance in dollars, euro and yen for Asia, excluding the more developed markets of Japan and Australia, has notched up three straight record years, climbing to US$210 billion (RM893.84 billion) in 2014, according to Thomson Reuters data.
Despite the record amounts, the market continues to be shallow and fragmented, with liquidity concentrated broadly in new issues. That has posed a challenge for companies looking to gain market share in electronic trading.
But the last few weeks has seen a flurry of activity from regional and global players looking to penetrate this space.
Apart from SGX’s initiative, New York-based Marketaxess Holdings Inc on Wednesday launched a platform offering bond trading in some currencies in addition to a corporate debt platform. Meanwhile Charles Li, Chief Executive of the Hong Kong Stock Exchange, said in November it plans to provide
greater access to China’s giant bond markets.
While Asia corporate debt issuance has boomed, it is still tiny in comparison to other regions. The record amounts of Asian debt are only about 5% of European international corporate bond issuance, for example.
The rise of new platforms has calmed some concerns that market makers in corporate debt are becoming scarce because of stricter regulations. But market watchers say such trading platforms capture only small-ticket deals rather than bigger issuance, which still tends to go through investment banks.
— By Rujun Shen
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