The move follows a stream of recent speculation about ABP's future, with emails circulating around the market that it was to close on the first of May and its management team had been asked to resign by the shareholder banks, while the company was liquidated with all assets sold.
This agreement would seem to reinforce the idea that at this point in time, with electronic bond trading in Asia still in its infancy, that there was not really room for two portals in the market.
Albert Cobetto, chief executive officer of BIA, says that the two parties have been in talks for some time. "We have been talking about combining the two businesses for several months with ABP and the banks," he explains. "The talks have been focused on how we develop the market. It was felt that it made more sense to get the banks on a unified platform in order to boost liquidity and trading so that all parties benefit and increase the level of participation in the Asian markets. The markets are fragmented, but by allowing banks to become more involved in the different markets, this will assist development."
Cobetto feels that bringing banks together onto one platform will hasten BIA's target of getting 25% of all trades done electronically. "Getting more people involved will boost liquidity, so this will help accelerate the process to get between 20-25% of trading done electronically," he adds. "That is our first objective and if we can reach that point in a year we'll be very happy. That is in line with the markets in Europe and the US where it has taken between two and three years to reach those levels."
As the final details for the merger are still being worked out, Cobetto could not disclose any information about what will happen to ABP staff, but said that preliminary agreements have been reached. He added that both parties were working through the documents before the merger is made official, which should take between one and two months.
In the year so far, BIA is approaching the US$3 billion mark in trading volumes for the Hong Kong dollar, Singapore dollar and G3 markets, the latter being Asian bonds denominated in US dollars, Euros and Yen.
