Eurex Bonds, the electronic communications network (ECN) for federal bond trading operated jointly by derivatives exchange Eurex and a select group of European trading houses is to open up to new participants and products.
The announcement was made as the two-month old trading system reported a recent record daily turnover of EUR1 billion and a weekly high of EUR2.6 billion in German government bonds.
The joint venture partners - which include ABN Amro, Barclays, BBVA, BNP Paribas, Caboto, Credit Suisse First Boston, Commerzbank, Deutsche Bank, Dresdner Bank, Goldman Sachs, Morgan Stanley Dean Witter and West LB - say they are to change the market model for the system to accommodate an expanded line-up of products and trading partners. Under the new set-up, all Eurex Bonds participants will be able to enter orders as well as quotes. Products traded over the system are also to be expanded to include Jumbo Pfandbrief issues, European government bonds and repos.
Eurex Bonds is expecting about 20 participants to be active in trading on the platform by year-end. The founding banks say they will continue to pump liquidity into the system.
In a recent statement Bundesbank president Ernst Welteke anticipated a bright future for the combined cash and derivatives trading operation. "The Bundesbank expects that, in the medium term, Eurex Bonds will establish its position as the leading electronic platform for bond trading in Europe. A large part of the trading in German federal securities that has been based abroad up to now could then take place on Eurex Bonds," he said.
The German central bank has been performing its market-management operations through the online market since October.