MTS dealer-to-client platform BondVision debuts

Italian inter-dealer broker MTS has started trading on its internet dealer-to-client trading platform BondVision, with Eur248 million of government and agency securities traded yesterday. Average deals were Eur20 million, which EuroMTS deputy chief executive Mario Spongano said was a good number, given that it is August.

Five clients and seven dealers are presently hooked up to the system, although MTS expects most of its 26 market-maker backers to support the system once they have established their technology connections.

Spongano, who worked in fixed income for 10 years at JP Morgan Chase prior to joining MTS earlier this year, said the priority was to “get as many clients and dealers as possible” on board within the next month, and added that he expects volumes to grow rapidly.

BondVision allows institutional clients to connect via the internet and request quotes from a number of BondVision dealers for more than 500 fixed-income securities listed on the MTS system.

Exisitng MTS dealers do not need to purchase additional servers or invest heavily in technology to compute prices and manage the BondVision auctions, claimed Spongano, but they do have to provide compulsory quotes to create liquidity.

Spongano defended the compulsory model, saying, “It is not a criticism, it is a strength... A consortium of dealers decides to commit liquidity in a compulsory way for the privilege that only they can operate the system.” This means that while dealers commit to give liquidity, only they can post quotes. As the Italians say, “do ut des” – I give to be given.

The BondVision platform also allows for straight-through processing both on the dealer side and for clients, which give relevant instructions to their depositories in an electronic form.

Spongano confirmed that MTS is looking to offer corporate bonds in the future, and is currently working out a framework to offer such a trading service. “We would be naïve to think that fixed income is only governments,” said Spongano.

He also said that the broker is in discussions with a number of parties interested in becoming dealers on the platform, but declined to name the institutions. The final move of MTS’ expansion will be to expand geographically, with Asia clearly a priority.