Transaction Capability Discussiongreenspun.com : LUSENET : Third Habitat : One Thread
Let's discuss just what it is that we mean when we say that we will develop transaction capability. JC - your research into ABP will prove crucial to developing this part of the discussion!
-- Anonymous, June 05, 2001
Unfortunately, as you may already know, I wasn't able to get the free trial for ABP. There are restrictions for US investors as to the type of bonds available for investments. I believe this is due to withholding tax issues. Anyway, it would be interesting to analyze the features of their trading engine. I suspect it is a B2B platform where investors have the chance to look at the inventory of participating banks, and then place a trade which is routed to the trading desk of the bank. Banks are then responsible for executing the trade, we would act merely as an intermediary or medium of exchange (bringing institutional investors and EM bond market-makers together).
I believe that without a platform, the business model is not complete. Providing prices alone is not a sustainable model because some banks like JPM are already giving these away. It's just a matter of time until the business cracks. I believe that the inability to get more contrib. is because many banks do not perceive that there are significant benefits from this action. Yes, we can argue that it can help them increase their brand name and generate more business, but they won't be able to quantify this. With the platform, these benefits are clearly quantifiable in terms of the number of trades generated. I believe that once banks realize this, they will be happy to contribute by offering their inventory online through us, providing prices, and proprietary research to drive their sales.
In addition to all these feautures we could add our own analytical tools, and I believe it is very important to get news providers. News and events have an effect on asset prices, so it would be nice to have these right in front of you before deciding to place a trade.
-- Anonymous, June 07, 2001