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ECBC to create a covered bond trade platform

The European Covered Bond Council is investigating plans to replicate the telephone-based trade practices that dealers prefer with an online trading system.

This action follows a suggestion by Ted Packmohr of Dresdner Bank in response to the changed trading conditions brought about by the credit crisis.

The system, if implemented, would make available to investors the prices at which the bonds were traded on a delayed basis. The de-lay would protect traders’ commercial sensitive information.

It would also enable issuers to access the system to see how well their market makers were re-sponding to requests for bids.

Writing in the European Mortgage Federation’s newsletter, Richard Kemmish, head of covered bonds at Credit Suisse, said: “There is still a lot more work to be done before the covered bond market gets a trading platform that can cope with the current and future market conditions.

“But, if nothing else, the work that has already been put in by the ECBC’s members has underlined both how importantly the market treats this topic and how the covered bond community can work together to address the problems thrown up by the current market conditions.”

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