The global board of directors of the Securities Industry and Financial Markets Association (SIFMA) has announced expanded coverage of the fixed income markets with the launch today of the SIFMA European Covered Bond Dealers Association (ECBDA).
SIFMA Europe has a strong focus on the primary and secondary fixed income markets, with an influential policy and advocacy division that supports each of these business areas of its member firms. Now, SIFMA Europe is extending this successful member service model to the covered bonds markets in Europe with the ECBDA.
"The formation of a covered bond dealers association will help further our strategic objective of being a full service, member focused and pan-European trade association," said Karsten Moller, Executive Vice President, Head of SIFMA Europe and Asia.
The ECBDA will represent dealers in the European covered bond markets and hopes to replicate and complement the successful model applied by the European Primary Dealers Association which represents primary dealers in the European government bond markets.
"There are differences between the government bonds and covered bonds markets, however the rationale of these organisations is the same: to bring institutions together in order to facilitate a strong, constructive dealer voice in an important product," said Mark Austen the Managing Director of both ECBDA and EPDA.
Austen added that the ECBDA is keen to work alongside issuers and investors, "We wish to complement the work of existing bodies in the covered bonds space, notably the Association of German Pfandbrief Banks (VDP) and the European Covered Bonds Council which represents the broader market including covered bond issuers."
The covered bond markets have undergone similar liquidity challenges to other products of late, acknowledged Austen, but he is positive about the product's long term prospects. "We are optimistic about the long term future of the covered bonds markets. Covered bonds represent a safe and reliable funding mechanism and investment product. We expect this will become clear as the dust begins to settle and markets calm. Now is the time for dealers to discuss how that market should re-emerge."
The following dealers have agreed to join the ECBDA: Barclays, BNP Paribas, Commerzbank, Danske Bank, Deutsche Bank, Dresdner, Morgan Stanley, Natixis, Royal Bank of Scotland , Société Générale, and UBS. Each of these banks either makes markets in at least 50 covered bond or ranks among the top 20 underwriters of covered bonds in Europe . It is expected that more firms will join in the future.
The four person Executive Board for the Association's first year comprises Co-Chairs Carsten Mosch, European Co-Head of Liquid Rates Trading at Deutsche Bank, and Torsten Elling, Head of Covered Bond Syndicate and Trading at Barclays Capital. Sebastien Rosset, Executive Director of Fixed Income Trading at UBS, will serve as Vice-Chair and Sebastien Gianfermi, Head of Euro, SAS and Covered Bonds Trading at BNP Paribas, will be Treasurer.
"We will be considering possible initiatives to help return liquidity to the covered bond markets. Achieving a coherent dealer voice is a big step in the right direction," said Co-Chair Carsten Mosch.
Fellow Co-Chair Torsten Elling said that the association would also be examining the primary markets, "There are a range of issues that could help to improve the primary market which we plan to review over the coming months."
Austen said that the new association would complement SIFMA's covered bond activities in the US and Asia. "We will leverage SIFMA's global reach for the benefit of our Members. As regulators in the United States consider the development of this product, we would like to think that European dealers will have a valuable contribution to make, given their expertise and the strong history of this product in Europe. We will therefore be working closely with SIFMA's offices in New York, Washington and Hong Kong."