Trade Fractional Bonds on an Electronic Bond Exchange – BondbloX by BondEvalue

Electronic Bond Trading

Bonds are fixed income instruments which are issued by an agency seeking debt and includes Sovereigns, local governments or corporates. These instruments are issued in the primary market and then traded in the secondary market similar to stocks. Traditionally, there has been a major difference between the trading of stocks and bonds. While stocks have been traded over exchanges, most bonds have been traded over the counter (OTC). OTC is a form of direct trading between two parties generally through an agent. Major reason for the bonds being traded over the counter was the sheer number of bonds issued vs the stocks issued. Equity is generally issued once or twice whereas bonds are issued several times over the lifecycle of the issuer. Further, the bonds of a company can also be of different tenor and with different coupon rates. Thus, there are many more variables associated with bond trading. In the past limited computational power and the wide spread of the bonds presented enormous challenges to these being traded over exchanges. Thus, these were traded OTC. However, with the improvement in technology, including increased computational power and block chain, trading of the bonds over exchanges has been made possible. Trading of the bonds is trending towards electronic bonds exchanges. Trading bonds over the exchanges has several advantages. The most important advantage is the transparency which the electronic exchange provides. The prices of the bonds have been historically very complex. Electronic exchanges bring much-required transparency in the bid-ask pricing. Another advantage of trading bonds over exchanges is the high liquidity presented by electronic exchanges. Bonds traded over the counter or through Exchange Traded Funds (ETF) have been highly illiquid. Electronic exchanges have large data capacities. This allows a larger number of the bonds to be listed. Another, important advantage of trading bonds over the electronic bond exchange is the low cost per trade and large volumes of trade possible over these exchanges. Only listed bonds would be traded over the bond exchange.

BondEvalue is a bond price tracking system and will shortly operate a bond exchange. The salient features would be as follows.

Fractionalisation BondEvalue would allow conversion of an existing bond in the secondary market equivalent to US$200k into smaller denominated fractional bonds called BondbloX of denominations of US$1,000

Electronic and Transparent  BondbloX allows trades through exchange. This ensures that the trade is totally transparent for all the stakeholders. 

Visit https://www.bondblox.com/ to know more about trading bonds.