Spanish exchange Bolsas y Mercados Españoles (BME) has launched a multilateral trading facility (MTF) targeted at institutional investors wanting to buy corporate bonds in mid-tier firms.
Mercado Alternative de Renta Fija (MARF) is aimed at giving an alternative funding channel for small and medium-sized enterprises (SMEs) with less strict requirements, quicker procedures and lower issuance costs.
MARF isn’t the only corporate bond platform to be launched by a European exchange recently. Nasdaq OMX, operator of the domestic markets in Sweden, Finland and Denmark, also launched First North Bond, an MTF for fixed income last year. NYSE Euronext's platform EnterNext has also expanded its offering from equities to fixed income products in Brussels earlier this year. And banks facing tighter capital requirements on fixed income trading have begun to compete with existing electronic bond trading platform providers such as Tradeweb and MarketAxess.
BME’s new MTF was presented in the Bolsa de Madrid by Spanish economy minister Luis de Guindos and BME chairman Antonio Zoido.
MARF is fully operational and in the process of signing members and registered advisers. It will be managed by AIAF, BME’s corporate debt market.
To guarantee the success of MARF, BME has made regulatory changes in relation to issuers and investors, removing the leverage limit for bonds issues by joint stock companies for sophisticated investors. Obligations related to the public deed, registration with the companies register, publicity and book-entry registration have been made more flexible.
The private insurance and investment fund regulations have been modified in order to allow buy-side to invest in MARF and to make the investments eligible for coverage by technical provisions in the case of insurance.
In addition, the corporate tax code has been changed so that investors’ capital gains from investments in MARF are exempt from withholding tax. The state-owned bank attached to the Spanish Ministry of Economic Affairs and Competitiveness has also created a specific line of credit to promote investment in bonds and corporate debentures through MARF.