Banks struggle to deliver their internet promises
At the start of 2000, many banks trumpeted their ability to distribute new bond issues online, fearful of being left behind by eager issuers. At the same time their trading sides announced, often with great fanfare, their own new internet-based trading sites and new multi-dealer platforms put together among consortia of banks. Since then, banks have struggled to deliver on these systems and to integrate them properly. Some now think the internet will merely make the existing market model more efficient, not overthrow it. But a few still hanker for revolutionary change in the bond market. Peter Lee reports
|It may be an apocryphal story, an urban legend of the modern fixed income markets, but the head of e-bonds at a bulge bracket US investment bank nevertheless tells it with real relish, as if it happened to his best friend, or, more likely, his worst enemy. "I've heard of one salesman at a leading firm working on an e-bond who took an order from a major global asset manager for several hundred million dollars. The investor wanted this to be the lead order in the transaction. The salesman said the firm was delighted with the order but please could the client go back and input it online, because this was, after-all, an e-bond deal. The account was so annoyed, he just put the phone down."
The lead manager lost the order that could have priced the deal. The salesman must have had a very uncomfortable conversation with his boss while they worked out what to tell the issuer.
Talk to bond traders and syndicaters about their frantic efforts earlier this year to stake claims as leaders in trading and distributing bonds on the internet and you will soon here several variations of this tale.