Saxo Bank is the latest entrant to the electronic bond trading market, with a limited offering targeting mid-market institutions and retail clients.
The bank has launched a fixed income trading platform that will focus on a relatively small and liquid universe of bonds and will not look to facilitate buy-side to buy-side trading, in attempt to avoid the pitfalls that other platforms launched in recent years have suffered.
Simon Fasdal, head of fixed income trading at Saxo Bank, said: “We wanted to take an approach of doing what is possible in the bond market. Not all bonds are equal so we have focused on 5,000 bonds that are suitable for digital trading. There has also been a false assumption that buy-side to buy-side was the answer to the bond market’s liquidity issues but we don’t want to rely on that so we focus on dealing with the tier one dealers.”
Bond trading is due to be rolled out in October on Saxo’s SaxoTraderGO multi-asset trading platform and will enable trades to be highly automated and take place in seconds.
Saxo is aiming to make its mark in the highly competitive electronic bond trading market by driving the cost of trading many of the most bonds down. It said the scalability of the platform should enable an average price improvement of 30 basis points on corporate bonds and 5-10 basis points on government bonds.