The slow e-road to Japan’s bond trading future
Japan’s small and slowly developing bond e-trading business is dominated by two firms, and having two separate platforms for the same product isn't speeding things up. Lawrence White asks the CEOs why this is.
"I WAS BORED," says a smiling Kiyomi Saito as she recounts the story of JBond Securities’ creation while ushering Euromoney into the firm’s tiny Tokyo office. "I had earned enough money from hedge fund sales, so when [JBond COO and former bond trader] Daisuke Murakami came to me with the idea I agreed very quickly. At the time we thought we’d only be creating a provider. We weren’t sure if we’d need a PTS [proprietary trading system] licence from the FSA but we didn’t want to waste time so we went ahead with raising capital and ended up receiving the licence just 17 days after applying. I believe other players such as Bloomberg and Yensai spent more than a year getting the licence."
Five years later and JBond is still in business, but Saito says that the pace of the development of the e-trading market has been frustratingly slow. Indeed, it has been lethally slow for some: there have been several failures already, including one effort by Italy’s MTS and a joint attempt between Lehman Brothers and Softbank at a platform for trading corporate bonds. Now JBond’s main rival is Yensai.com, a larger operation owned and backed by a consortium of participating dealers that includes the major Japanese securities houses.