An initiative trying to combat bond illiquidity by increasing communication around trading has attracted growing support from banks and fund managers.
Project Neptune is a messaging system attempting to standardise the information shared between dealers and asset managers. It wants to help dealers to display their bonds without having to disclose who is buying or selling, to boost trading.
Liquidity is a huge issue in global bond markets at present.
Investors are shying away from smaller and emerging fixed income markets amid fears that US interest rates will rise soon and spark a mass sell off, making it harder to get in and out of positions.
Technology consultancy Etrading Software is managing Neptune’s soft launch.
“The future view of Neptune is to look at areas where the industry can commoditise and standardise but our core focus is to get it live and get other asset classes on it,” Sassan Danesh, partner at London-based Etrading, told the Financial Times.
Financial institutions are looking at a number of ways to combat upcoming volatility and response to the initiative has been strong.
So far, 42 financial firms have got involved, including asset managers Standard Life Investments, BNP Paribas, JPMorgan, Aviva Investors, Axa IM Credit Suisse, Nordea Investment Management and Credit Suisse.
Aberdeen Asset Management’s chief executive Martin Gilbert announced in June that the firm had set up a $500m (£322.1m) credit line in case of redemptions from its fixed income funds.
Mr Gilbert told the FT at the time that Aberdeen “need to be prepared if it gets ugly” in the bond market, and other fundhouses are likely to have similar plans in place.
