Eurex Bonds, the electronic trading platform operated jointly by the international derivatives exchange Eurex and major bond-trading houses, has introduced market-making in an effort to deepen liquidity. Eurex also announced a cut in market-making fees.
The Eurex Bonds joint-venture partners will issue price quotes for at least three of the five existing product segments: bond and futures contracts, as well as benchmark Bunds (those deliverable into the corresponding futures contracts) and cash bonds (all other tradable German Government bonds). In addition, quote obligations for the German State bond and jumbo Pfandbriefe segments may also be adopted. The introduction of this new model will be accompanied by cuts in market-making fees.
With this move, Eurex Bonds is adopting a model that the parent exchange has already successfully tried and tested in the derivatives market. Indeed, Eurex Bondssays the new model has already led to an additional three Eurex Bonds market participants taking on market-maker status.
The Eurex Bonds trading platform currently comprises a total of 23 banks and trading houses, 12 of which have adopted market-making obligations. Eurex believes the number of market participants and market makers at Eurex Bonds will soon increase as several international institutions are said to have shown a keen interest in participating in Eurex Bonds.