Bloomberg and the Central Bank of Sri Lanka (CBSL) yesterday announced the launch of the Bloomberg E-Bond trading and market surveillance system, a new electronic trading and reporting system for Sri Lankan government securities (G-Secs). 

Over 20 commercial banks and primary dealers are required to trade and report inter-dealer trades on Bloomberg’s E-Bond platform, which serves as the primary execution platform for fixed income secondary trading in Sri Lanka.

“Bloomberg shared a common vision with us in developing a more transparent and efficient market and ecosystem for all Sri Lankan government securities,” said CBSL Deputy Governor P. Samarasiri.
The CBSL supervises public debt management and financial sector regulation.

“The introduction of the Bloomberg E-Bond system is a significant milestone towards establishing a more credible and competitive government securities market and part of a series of strategic actions taken,” he continued. 

“With real-time trade and reporting data of secondary market activity, along with the competitive auction-based issuance system currently in operation, the financial market will benefit in the medium to long term in terms of market transparency, price discovery and liquidity. In fact, early signs of such benefits are already seen in the market.”

As of August 1, 2016, the CBSL required all primary dealers to undertake inter-dealer trades and reporting on outright deals with investors via Bloomberg’s E-Bond trading system. In the second phase, all licensed banks were required to do the same as of September 15, 2016. A summary of trading information consisting of yield rates and volume of securities traded is published on the CBSL website daily.

“Moving towards an electronic bond system will ultimately enhance Sri Lanka’s market transparency, which leads to greater liquidity and trading volumes,” said Commercial Bank Global Markets Head Prins Perera.

“For the first time, the primary dealers in Sri Lanka are moving from voice to an electronic trading platform,” said CAL CEO Gihan Hemachandra. CAL is a primary dealer appointed by the CBSL. 
“Over time, this will increase transparency and liquidity as onshore and offshore investor confidence grows, while also reducing transaction costs, allowing us to trade more efficiently.”

The Bloomberg E-Bond system provides a complete, consolidated marketplace for Sri Lankan government bonds, offering market participants a robust and flexible set of tools supporting the full trade workflow. This includes pre-trade price discovery and analytical tools, the ability to handle both multi-dealer request-for-quote (RFQ) and order trading, straight-through processing (STP) functionality and integrated trade capture and reporting tools. 

“We are delighted to work together with the Central Bank of Sri Lanka to improve the functioning of its capital markets by building a more transparent, liquid and efficient bond market,” said Bloomberg L.P. South Asia Head Sunny Chhabria.

“This is a great example of how we are providing technical expertise and partnering with a market maker community to adopt international best practices, enabling global investors looking at emerging markets to make more informed investment decisions.” 

 ‘Bright prospects’ for Lankan economy: Bloomberg

In a telephone interview with Mirror Business from Mumbai, Bloomberg L.P. South Asia Head Sunny Chhabria said Sri Lanka is a vital point in Bloomberg’s business push in the South 
Asian region.

Chhabria said the Sri Lankan economy has “very bright prospects” and Bloomberg is extremely happy to partner the Central Bank with its endeavour to create a more transparent and liquid government 
securities market.

Bloomberg has launched E-Bond platforms in 15 other countries.

When asked how a relatively small bond market like Sri Lanka could benefit from an online bond trading platform, he said the more illiquid the market, the greater the need for the electronic trading of government securities as it could address the very issue—the liquidity.

The Central Bank recently said it is also considering electronic trades for repurchase and reverse repurchase deals in government securities.

According to a World Bank study, apart from improving liquidity and transparency, an electronic trading platform could reduce some trading costs and risks for dealers, customers and create new opportunities in the market place.

Such a platform also makes the life of central banks world over easier with lower funding costs and the ability to monitor the primary dealers for compliance. 

According to Chhabria, the Bloomberg secondary market E-Bond platform is commission-free and is highly flexible.

He also said for the last couple of months Bloomberg has been providing the Sri Lankan bond market participants with the required training to operate within the E-Bond platform.

Apart from the on-site training provided by Bloomberg personnel in Colombo, a 24-hour, 365-day help desk is operated by Bloomberg for any queries that may arise when using the platform.
Bloomberg is celebrating 20 years of operations in India, this year.