Euronext MTS starts basis trading European bonds versus futures

Speaking to FOW, the chief executive of MTS Angelo Proni said this week the platform has executed its first basis trade after announcing the functionality three months ago.

Proni said: “In April, we announced our plan to enhance the BondVision dealer-to-client ticket (DCT) protocol to support both legs of bond basis trades by adding the fully integrated posting of the futures leg. We recently executed our first basis trade through this feature and it is showing good promise to support the continued growth of BondVision.”

MTS, which is operated by European exchange group Euronext, said the bond leg was traded on its own venue while the futures leg was executed using Eurex futures contracts, the main market for European government bond futures.

Proni said algorithmic trading is taking off in European government bonds (EGBs) and adoption is increasing faster there than in government bond futures.

The MTS chief said the firm is also making progress in European credit, driven partly by lower trading fees.

“The credit market structure is slightly different to EGBs and there is also the fact that there are simply many more instruments in credit. That said, we are beginning to enjoy real momentum that we intend to build upon,” Proni said.

MTS currently has 15 dealers live on credit and this number is expected to increase by at least two before the end of this year.

The chief executive added: “In rates we are providing better value for money than the competition but in credit we are significantly more cost-effective so the buy-side has to pay attention, considering that dealers are beginning to factor this into their price quotes on BondVision.

“In credit, portfolio trading has grown massively in recent years and we plan to start supporting that on MTS in the coming months.”

MTS’ fixed income trading business is seen as a core driver of Euronext’s ‘Innovate for Growth 2027” strategy as detailed by Euronext chief executive Stephane Boujnah in November last year.

Euronext’s head of derivatives and post-trade Anthony Attia said this month the group has completed the first phase in the European group’s ambitious plan to move aggressively in European repo, a key part of a broader strategy to expand in fixed income and derivatives.