BNP launches online structured note trading platform

Dubbed CredIM, the system will offer real-time pricing, with the bulk of trading expected to occur between 9am and 4pm GMT.

CredIM will offer a large range of off-the-shelf products such as first-to-default credit and equity-credit linked notes. But BNP Paribas said this range will develop in response to client demand.

To begin with, traders will still meed to telephone BNP Paribas' sales desk to execute a trade. But the bank plans to offer electronic processing through the bank's LiveCredit website after two months.

The system is targeted at private banks, institutional clients and hedge funds in Europe. But BNP Paribas expects offer a similar service to US and Asian clients in the future.

The bank also wants to provide retail customers with access to CredIM and expects to gain regulatory approval to launch the service to private investors in Hong Kong - a large market for structured products - in 2005.

BNP Paribas developed the system in response to a tightening of competition in the structured credit-linked note market. “Competition is very high in the market for these products, with very tight bid/offer spreads and similar prices being offered by all the issuers," says Cedric Jeanson, head of the CredIM market-making desk at BNP Paribas. "Clients now want better service and liquidity, which this system can offer them," he added.

By offering a liquid secondary market for the products it issues, Jeanson expects BNP Paribas to win more mandates for primary issuance from clients.

Jeanson stressed the system is not just for new products, but also to provide liquidity and valuation services. With the adoption of IAS 39 next year, many positions will have to be valued at mark-to-market prices. “These prices can now be sourced through the platform, allowing easier and quicker valuation,” said Jeanson.