SGX to launch bond trading platform

Singapore

SINGAPORE Exchange plans to roll out a bond trading platform by mid next year which will initially include Asian corporate bonds in G-3 currencies, followed by Asian currencies.

Towards this end, it has formed a new subsidiary SGX Bond Trading to drive this initiative - the first of its kind focused on Asian bonds.

The new platform hopes to become an Asian Liquidity Centre for both high-yield and investment-grade corporate bonds, said SGX in a statement.

"SGX believes that in the long term, the Asian fixed income markets are poised for strong growth, given the region's growing infrastructure needs and investor demand for steady, long-term returns," said SGX chief executive Magnus Bocker.

"SGX is pleased to work closely with the Asian fixed income community to build and operate an electronic OTC liquidity venue dedicated to Asian bonds to facilitate this growth," he added.

As part of its efforts to consult the industry, SGX held an inaugural steering committee meeting with senior representatives of 32 leading Asian fixed income dealers and investors on Tuesday. SGX said the committee will provide strategic direction and feedback on the development and refinement of services provided by SGX Bond Trading to address the needs of Asian bond market participants.

SGX has signed a long-term contract with electronic trading solutions provider TradingScreen as the technology platform provider.

"Our goal is better fixed income markets for Asian market participants and we will ensure that this venue offers many different trading approaches which are the characteristic of OTC markets," said SGX president Muthukrishnan Ramaswami.

SGX's latest move was lauded by industry participants.

"SGX's new trading venue has the potential to transform the Asian bond secondary markets for the benefit of its participants and reinforces Singapore's position as a leader in financial markets innovation," said Eric Lafon, UBS AG managing director of FX, rates and credit distribution.

A steering committee member and Standard Chartered Bank's managing director and fixed income, credit products and wealth management head Biswaroop Tapan Barua expects SGX's entry to raise the bar on market efficiency, more so when other players are cutting back on the scale of their participation in the fixed income markets.

Rohan Thakrar, head of Asian Credit at Royal Bank of Scotland and also member of the steering committee, said the platform will offer various trading approaches which are the characteristic of OTC markets.

"A dedicated electronic platform will help market participants to adopt electronic order routing and auto-execution capabilities for Asian bonds. This will enable investors to access Asian liquidity at an unequalled level of efficiency and standardisation," said Erik Tham of UBS Wealth Management's fixed income execution desk.