European bond-trading platform MPS SpA will discuss Friday whether or not to grant access to active traders, such as hedge funds, and expectations are that they will give the thumbs-up.
MTS controls as much as 80 percent of the electronic trading for the $5.4 trillion European government bond market, and hedge funds have been pushing for access for some time. If granted, it would allow funds to use algorithmic trading strategies that don’t work on the dealer-to-client platforms that hedge funds currently use to trade European government bonds, platforms like MTS BondVision and Thompson TradeWeb.
The other platforms that offer electronic European government bond-trading – HDAT, Eurex Bonds and Senaf – currently do not allow active trader access either.
According to Sang Lee, research director at Boston-based global research firm Aite Group LLC, hedge funds are anxious to expand into an area that’s so far been off limits to algorithmic trading. “When you look at any asset class these days, it’s very tough not to find hedge funds pressuring or inching into a market that wasn’t open before,” he said in an interview.