Fixed-income-market.com--an Internet software vendor headquartered in Graz, Austria--has launched an information and communications Web site targeted primarily at intermediaries and end-users who trade illiquid bonds. The site currently features descriptive bond data, and will eventually include calculation templates, a portfolio system and a database that provides clients with the ability to list indications of interest (IOIs). By the summer, the site is also expected to host auctions for a variety of bond instruments.
Guenter Leitold, chief executive officer of fixed-income-market.com, says the site--which is scheduled to be fully functional by June--expects its client base to consist of an eclectic mix of broker/dealers, investment banks, retail banks, mutual funds and insurance companies. Those clients, he says, will use the site's data and services mainly to facilitate the trading of securities that are short on liquidity--such as corporate bonds, emerging markets bonds, mortgage bonds, structured notes and medium-term notes. "We will incorporate the whole universe of bonds into the system but we expect this type of system only to make sense in the illiquid markets," says Leitold.
The most appealing feature of fixed-income-market.com may ultimately be its online auction capability. Leitold says that by June, everyone who registers--free of charge--to become a member of the site will have the ability to "call" a bond auction. "The party arranging the auction can decide if it is a new issue auction, or if he wants to make an auction for a secondary market security or a whole portfolio of securities," he says. "And everyone of those users can, with no cost, add his indications of interest to the auction as a non-binding bid."
After a bid is placed during an auction, fixed-income-market.com will then show bid information--including the price and the size of the bid--to the auctioneer. Then, if the auctioneer is interested in the IOI, it can buy the IOI contact information--including the contact's phone number and e-mail address--for a one-time fee of $50, says Leitold.
Prior to going live with its auction service, fixed-income-market.com will roll out a series of so-called "function blocks." One of those blocks will be an IOI database that will be available exclusively to the site's trading members--or members who trade in fixed-income securities on an "institutional investor" basis, says Leitold.
Though fixed-income-market.com will not offer clients the ability to execute trades, the IOI database--dubbed The Marketplace--should help clients cut out the middleman in trades. After viewing anonymous IOIs on the site, Leitold says, a client can buy contact information from fixed-income-market.com and negotiate a trade directly with the party that floated the IOI. "What I would expect is that the person responsible for the IOI will get a call or an e-mail," says Leitold, noting that the vendor is no longer involved in the trading process after it sells IOI contact information to a client.
Besides revenues it generates from "name give-up fees" for auctions and IOIs, fixed-income-market.com also expects make money via a 1-900 advice telephone number it will post on its site.
In addition, the site may also generate revenues via a trio of other information services it offers. Those services, or "function blocks," include a descriptive bond database, a portfolio system and calculation templates.
The descriptive bond database, which will contain 100 data fields per bond, will cover a wide variety of fixed-income instruments--including floating rate notes, convertible bonds and structured notes.
The calculation template, Leitold says, will be attached to each bond covered by the site, enabling users to calculate all of their risk measures and yield measures. Meanwhile, the portfolio system will enable users to input their bonds, track them and "evaluate them on a market-to-market basis daily," says Leitold.
Fixed-income-market.com has already gone live with the descriptive database function block. The portfolio system and calculation blocks are supposed to be rolled out within the next month. The IOI database and the online auction service are expected to be completed by June.