As European head of government bonds at JP Morgan, Eloi Duverger sought to expand Morgan’s client franchise by reaching out to clients who the bank did not cover. Rather than get “an army of 100 sales people”, he recalls, he decided to do it the modern way.
What the Frenchman came up with last year was JP Morgan eXpress, an electronic trading platform designed to sound nippier than Deutsche’s existing “Autobahn” facility and to offer a market-making service to new or uncovered clients. “They loved it,” says Duverger. “But soon they were saying they wanted one system giving them access to competitive quotes from different dealers.”
Such sentiments echoed those being heard at Deutsche Bank, where Saman Majd, global head of government bonds, was fast coming to the conclusion that what was needed was a web-based system similar to those that already existed in the US.
Earlier this year representatives of ABN Amro, BNP Paribas, Deutsche Bank, Dres-dner Bank, JP Morgan and Italy’s Caboto Holding Sim met to discuss a joint initiative, realizing that if they didn’t act fast someone would beat them to it. Thus was born BondClick, Europe’s First platform for trading in European government bonds in cyberspace.
A company was set up in which each bank had an equal share. A shortlist of seven candidates to run it had been drawn up by the time Duverger threw in his hat. His boss, Gael de Boissard, initially unenthusiastic about letting him go, soon agreed that he was the man for the job (he had been involved with the project from the outset as number two to Boissard, JP Morgan’s representative on BondClick). Several interviews later, Duverger’s appointment as chief executive was confirmed and JP Morgan lost a loyal servant.
Eloi Duverger was born in 1960 in Valen-ciennes, where his father was a steel industry manager. He studied in Paris at the European Business School, taking six-month stints in Germany and London. Having decided that he could imagine nothing more fun than life on the trading Floor, Duverger joined JP Morgan in Paris on the foreign exchange desk. Two years later he moved to Fixed income.
In 1991 he became head of Fixed-income trading in Brussels, where he was responsible for the whole of Benelux. “There was very little attention from major dealers and other competitors and we were the No 1 house there for many years,” he recalls. Benelux at the time was very profitable for JP Morgan.
After Five years, however, Duverger wanted a new challenge and in 1996 JP Morgan sent him to São Paolo as head of the Brazilian local Fixed-income and derivatives markets. His First few days there were a little hairy – not least when the school bus failed to pick up his three children, leaving them stranded outside the school gates for two hours. But the family soon learnt Portuguese and grew to love the country. Professionally, however, he found that the Brazilian central bank and the ministry of Finance were nervous and that the bond market wasn’t moving as fast as he wanted it to. When in 1997 the call came from London for him to become co-head of European government bonds, he was the only member of his family to vote in favour of going “but my vote counted for Five”.
JP Morgan was then centralizing its trading operation in London in preparation for convergence. Within nine months the bank had brought its traders from around Europe to London and Duverger took direct responsibility for the distribution. “It was an interesting challenge,” he recalls. “At that time most of the banks realized that the revenues made on government bonds were not as big as before, and competition was becoming more intense.
Banks were tempted to shift some of their resources away from government bonds into credit and derivatives stuff. I was OK with that but I wanted to be certain that rather than relying on sales people spending a tenth of their time selling my bonds, that I could build a small team that would really focus at least two-thirds of their time selling my products. With this core team we were much more integrated into the team and we built a much deeper relationship with the client.”
As to BondClick, Duverger is adamant “that it is something that the market really needs. To me it’s not just a dot com. There is no short-term objective to Float. I want to develop something that will rebuild the bond market.”
The site is expected to go live by the end of the year and Duverger does not discount the possibility of competition.
“Either the idea is bad,” he says, “or it’s great and we will get competition. But I think we have many advantages.” These, he says, include the fact that the six founding shareholders claim 30% of the market in European government bonds.
