The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookiesbefore using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
BANKING

Electronic trading: Members not so keen on letting hedge funds into EuroMTS

But move would boost liquidity when volumes are falling.

The supervisory board of MTS, the European bond trading platform is to receive recommendations from a committee, comprising mostly banks, on opening up the platform to third-party access during the middle of this month. Allowing hedge funds entry would dramatically change the number of players and might boost liquidity. However, few existing participants think the plan is a good idea.

Flat yield curves and becalmed bond markets have done EuroMTS few favours in terms of volumes in recent years. Although the platform remains the leading inter-dealer market for sovereign debt it has suffered from declining volumes. Activity fell 22% in 2005 on the previous year and 2006 was also disappointing – down 15% on 2005.

Hedge funds account for only 10% of investment in European sovereign debt, according to a poll of the top 20 EU bookrunners conducted by the BMA (now SIFMA) in September 2006. But the importance of hedge funds is magnified by the fact that they trade more frequently than other types of investors. Furthermore, they are the fastest-growing client category that trades electronically (see chart).

Sovereign debt market dealers suggest that it is mostly because of these declining volumes that the possibility of third-party access is being so actively considered by MTS.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?