TheMuniCenter yesterday began offering corporate bonds in a move to become a one-stop shop for all bonds.
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According to Thomas Vales, chief executive officer at TheMuniCenter, the firm was prompted to offer the securities partly because a number of existing clients requested the opportunity to trade corporate bonds on its platform.
Sang Lee, analyst at Celent Communications, a research and advisory firm, said the online trading platform would become a stronger player in the marketplace if it could broaden its horizons. Lee added that the firm would be stronger if it relied on more than one type of security, just in case volume decreased in a single sector.
Since 2000, the number of electronic fixed-income platforms have dropped off from 70 to 40 at the end of last year, according to Lee in a recent report.
According to the Celent report, "while TheMuniCenter is the one to beat in the municipal bond market, it still faces an uphill battle in the overall fixed-income market." The report also noted that it is not clear if TheMuniCenter can remain as a single-issue platform.
TheMuniCenter carried out test trials of the corporate bond trades over the past two weeks and decided to go ahead based on its success over that time period. The firm does not have a mandatory size requirement for the offerings that will be available for trades. However, Vales said those sold will be of high grade.
As corporate trading on its platform grows to a critical mass that matches that of its municipal trading, TheMuniCenter also will consider trading Treasury securities as well. Currently, it has 200 firms that offer municipal securities over its trading platform.
The report noted that as the firm contemplates moving into the corporate and Treasury arenas, it will run into more established and larger competitors Some of its current competitors include Valubond and eBondTrade. TheMuniCenter targets broker dealers, institutional buy-side firms, financial advisers and planners. It is owned by a group of investors that includes Chapdelaine & Co., Financial Security Assurance, Lehman Brothers, Merrill Lynch & Co., Morgan Stanley & Co., and Salomon Smith Barney Inc. The firm was established in May 2000.
