MILLENNIUM Advisors has expanded its trading and sales operations into Asia to take advantage of surging demand for electronic trading and US dollar bonds in the region.
The US-based trading firm recently opened a new office in Singapore, after considering potential locations in Hong Kong and Dubai, the company said. Trading began on Jul 3 with three employees.
“We have been thinking about it for quite some time,” said group chief executive officer Laurent Paulhac. “The most challenging question in business is not what to do but when to do it. These markets are evolving quickly and you need to be there.”
The electronic fixed-income market in the region has grown fast and is still scaling. Last year, 56 per cent of Asian investors utilised electronic trading compared to 36 per cent a decade ago, according to a report from Coalition Greenwich, a financial information services provider.
Millennium, which says its “core strength” is as an electronic liquidity provider, sees that as an opportunity.
“Asian fixed-income investors are already planning to increase their usage of e-trading across product categories and trading protocols,” Kevin McPartland, head of research for market structure & technology at Coalition Greenwich,” wrote in the report.
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“As dealers increasingly price orders via algorithms, liquidity during Asian trading hours will continue to improve.”
It’s an illustration of how quickly global fixed income has integrated itself into an electronic transaction world long dominated by equities.
The use of portfolio trading – which allows investors to buy and sell large lots of different bonds at once – is increasing, exchange-traded funds are providing easier access to retail buyers, and higher yields are keeping demand strong.
It’s not only electronic trading that has surged. The demand for US dollar bonds from Asian investors has also soared, according to Millennium. The firm’s average trade count jumped 50 per cent last month compared to the second quarter, while volumes surged 83 per cent.
“We have seen this appetite for US dollar corporates only grow,” said Caroline Serdarevic, Millennium’s global head of sales and head of UK and Singapore.
“With greater liquidity, more and more execution was happening earlier in the day in the Asia morning. We needed to have boots on the ground.” BLOOMBERG
