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Euro challenge for MTS

Indices

Garbi: "JPMorgan and Morgan Stanley
have their indices. These are well done
but a fund manager cannot replicate it."

MTS, the European interdealer bond trading platform, is planning to create a new index for euro sovereigns.

The move looks set to give rise to a range of new derivative products. But the quality of the platform's data alone will not be enough to ensure success for the index, and some banks, including MTS shareholders, are reluctant to support it.

The product will initially give daily closing prices and reference prices for sovereign bonds from all 11 eurozone countries. A little later, updates will appear hourly. They could later be transmitted in real time.

MTS will use algorithms created by the French bond index provider CNO to feed out prices. Those prices will then be sent to a third party that will create and disseminate the index. The identity of that third party is likely to be announced this month.

The key advantage that MTS has over the rival index providers is the quality of its data. Gianluca Garbi, chief executive of MTS, says: "All MTS prices are tradeable.

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