(Bloomberg) -- Millennium Advisors has expanded its trading and sales operations into Asia to take advantage of surging demand for electronic trading and US dollar bonds in the region.
The Charlotte, North Carolina-based trading firm opened a new office in Singapore, after considering potential locations in Hong Kong and Dubai, the company said. Trading began on July 3 with three employees.
“We have been thinking about it for quite some time,” Laurent Paulhac, the firm’s group chief executive officer, said in an exclusive interview with Bloomberg News. “The most challenging question in business is not what to do but when to do it. These markets are evolving quickly and you need to be there.”
The reason is clear: the electronic fixed income market in the region has grown fast and is still scaling. Last year, 56% of Asian investors utilized electronic trading compared to 36% a decade ago, according to a report from Coalition Greenwich, a financial-information services provider. Millennium, which says its “core strength” is as an electronic liquidity provider, sees that as an opportunity.
“Asian fixed-income investors are already planning to increase their usage of e-trading across product categories and trading protocols,” Kevin McPartland, head of research for market structure & technology at Coalition Greenwich,” wrote in the report. “As dealers increasingly price orders via algorithms, liquidity during Asian trading hours will continue to improve.”
It’s an illustration of how quickly global fixed income has integrated itself into an electronic transaction world long dominated by equities. The use of portfolio trading — which allows investors to buy and sell large lots of different bonds at once — is increasing, exchange-traded funds are providing easier access to retail buyers, and higher yields are keeping demand strong.
And it’s not only electronic trading that has surged, the demand for dollar bonds from Asian investors has also soared, according to Millennium. The firm’s average trade count jumped 50% last month compared to the second quarter, while volumes surged 83%.
“We have seen this appetite for dollar corporates only grow,” said Caroline Serdarevic, Millennium’s global head of sales and head of UK and Singapore. “With greater liquidity, more and more execution was happening earlier in the day in the Asia morning. We needed to have boots on the ground.”
©2024 Bloomberg L.P.
