Only the liquid need apply
Suddenly every large European bond issuer wants to be a part of EuroMTS, the euro government bond trading platform developed by MTS, the Italian exchange. It has attracted some 25% of European government bond trading volumes and now large European non-government borrowers are furiously lobbying it to admit their bonds on the system as well.
But rather than simply open the existing system to them, EuroMTS has set up a separate platform for credit products, to be called EurocreditMTS. "We decided that rather than simply incorporate non-government bonds into EuroMTS on an ad-hoc basis, it would be easier to set up a dedicated division," explains Robert Walton, manager at EuroMTS. "One immediate advantage of doing this is that it allows us to vary the eligibility criteria from those in force for the EuroMTS government system."
Last month EuroMTS published its eagerly-awaited eligibility criteria for EurocreditMTS. They seem tailor-made for Pfandbriefe: bonds allowed on the system have to be triple-A, collateralized with mortgages or public sector loans and denominated in euros. That will please some Pfandbrief issuers. "I think electronic trading will give more transparency to the Pfandbrief market and will increase its efficiency," says Rüdiger Luchmann, treasurer of Rheinische Hypothekenbank.