MarketAxess, an electronic marketplace bidding to modernise the way bonds are traded, is building its presence in the staid world of European private banking in its latest push to vanquish the telephone.
Electronic trading, long the standard in many financial markets, including virtually all equities trading, is making a steady advance into one of the final redoubts of buying and selling via telephone: the market for corporate bonds. But voice-broking, as it is known, remains common practice for bonds at many banks.
MarketAxess is now targeting private banks in Europe and Asia in a bid to strengthen its hand in those regions.
The push follows MarketAxess’s hire of Erik Tham from UBS in November 2018 as its head of private banking for Belgium, the Netherlands, Luxembourg and Switzerland.
Key to the initiative is developing software designed especially for private banks to buy and sell bonds. MarketAxess already has around 1,500 companies transacting on its platform globally.
Tham worked at UBS Wealth Management for more than 12 years until his departure last year. The former Accenture consultant is based at MarketAxess’s office in Amsterdam, which was opened as part of the bond venue’s Brexit planning.
Christophe Roupie, head of Europe and Asia at MarketAxess, said: “MarketAxess’s aim is always to improve liquidity access and trading efficiency for our clients, regardless of their sector, product needs or what side of the trade they are on.
“Our private banking clients are no different. In bringing on Erik Tham from UBS, and tapping into his knowledge of their particular needs and liquidity challenges, we have the opportunity to enhance and evolve the electronic trading model for private banks across both Europe and Asia.”
Greenwich Associates, the Connecticut-based consultancy, said in a report in January that electronic trading is gaining ground in bond markets. By volume, electronic trading accounted for 26% of total US corporate bond trading volume in the third quarter of 2018, up from 19% in the first quarter.
Greenwich predicted that consolidation is on the way for electronic corporate bond trading platforms.
According to a September 2018 report by McKinsey, the consultancy, private banks in Western Europe recorded record high profits of €15bn in 2017. The report said that private banks have benefited since 2013 from positive returns in the financial markets.
MarketAxess, which was founded in 2000 by chief executive Rick McVey, recorded trading volumes of $131.2bn in December. Its third-quarter revenues rose 6.1% year on year, to $101.4m. The company is set to publish fourth-quarter results on January 30.