SINGAPORE (June 22): Bonds have been favoured by investors for their promise of a steady, recurring stream of income for investors. However, relative to stocks quoted on a stock exchange, the bond market has been less accessible for retail investors.
As an asset class, bonds are generally traded among institutional and accredited investors. A typical investor would need to reach out to their brokerage’s relationship manager, who’d in turn obtain information and prices from the treasury desk before placing the trade on behalf of an investor.
To tackle this seemingly opaque and inaccessible market, wealth management fintech platform iFAST Corporation launched Bondsupermart in 2015 to provide investors with a one-stop solution for information on bonds.
Bondsupermart is a content aggregation website that is primarily focused on the Asian bond markets, and aims to become the information portal of choice for bond investors around the globe.
The portal first started with a Singapore-centric range of bonds and research but quickly expanded to carve out an Asian niche for itself, incorporating bonds around the region into both its research and platform.
“From our first day, we were clear in our mission to provide a new alternative to investors, one
that focuses on the availability of extensive research for all investors, and capitalises on
technology to make the process transparent, efficient and useful for investors,” says iFAST’s chairman and CEO Lim Chung Chun.
iFAST, under Lim, is known as a company with the knack for spotting market trends and new ways to capture new growth. It is known for famously creating the Fundsupermart portal that has shaken up the unit trusts distribution industry; it has moved into wealth management; it is bidding for a digital banking license.
Bondsupermart is making its mark in the bonds industry valued by the Securities Industry and Financial Markets Association at US$102.8 trillion – a big “untapped opportunity when it comes to the segment for individual investors”, says Lim.
Revamping the bonds market
Currently, information on stocks and exchange traded funds (ETFs) can be obtained easily from a simple Google search, where an abundance of information, research and views turn up instantaneously.
Yet, information on bonds, even basic ones, are only made available for investors through relationship managers, dealers or advisers. As far as credit research or reports are concerned, only professional data providers can offer these to investors. But this comes at a hefty price tag in the form of subscriptions that will eat into the margins of most investors.
With Bondsupermart, investors are able to access a wealth of information on up-to-date bond market information as well as third party updates and commentaries, which are offered to them for free. Through this, investors are offered a transparent experience when trading bonds.
Bondsupermart offers a suite of customised tools to aid in bond pricing calculations, performance tracking and bond comparison. With the click of a button, investors are able to access a ‘factsheet’ about each bond which covers basic information such as the issue size, coupon rate, date of maturity and any call or deferred interest payment features.
Apart from breaking down fundamental information into “easy to understand” pieces of information for investors, Bondsupermart also introduced Bond Express in 2016 in order to further improve the market for investors.
While corporate bonds typically trade in lots of US$200,000 each, Bond Express allows investors to trade in much more digestible lot sizes as small as US$5,000 each. This allows investors to diversify their portfolios and trade more efficiently.
Tailored fintech solutions for investors
According to Lim, greater accessibility and financial literacy has always been the end-goal for Bondsupermart. “By digitalising the information and processes for financial institutions in our region, we will be able to attain a greater outreach and begin to make trading of bonds online the new norm,” he says.
Bondsupermart takes pride in understanding clients’ needs and expectations, as well as their current systems. After a client’s requirements and Bondsupermart’s corresponding services have been laid out, the team will then set up workgroups with IT teams for the integration process.
Currently, Bondsupermart offers two unique solutions. It provides APIs and data feeds for bond information and transactions, which will be integrated into the financial institution’s mobile app or online platform to allow users seamless access to the bonds. Through this, investors can easily browse through the products instead of going through the hassle of calling or emailing their relationship managers for information.
Bondsupermart also offers a web-based platform catered for front to back offices which enables relationship managers to easily retrieve information and requests for quotes easily. With this platform, dealers will be able to communicate directly with relationship managers, access data and conduct dealing activities. Market makers, too, will be able to retrieve information and enter prices through the platform, while operations and settlement teams will be able to easily identify and track trades, and match payments where the need arises.
The Bondsupermart team will accompany its clients through the User Acceptance Tests, with dedicated Business Development and IT teams on standby for maintenance thereafter.
Bondsupermart is now looking to work with financial institutions to help them build competitively-priced fintech solutions, in order to make bonds trading more accessible to every investor. Potential partners include banks and other brokerage firms who can integrate these fintech solutions into their internal systems, or, as mobile applications for investors.
A growing market
Although Asian markets such as Singapore’s are lauded by investors for their stability and attractive returns, Lim notes that there are “numerous differences” between Asian bond markets and more developed markets such as those in the US or Europe.
Lim observes how manual over-the-counter (OTC) transactions typically conducted in Asian bond markets impedes operational efficiency, price discovery, and liquidity, leading to wider trading spreads and settlement risk. But things are changing for the better.
Looking ahead, Lim says recent advancements in infrastructure and technology, particularly the move towards electronic trading, pave the way for an “exciting” future for the bond market.
“These challenges also highlight the immense growth potential for the Asian bond market, given that trading volume and market size have grown steadily in recent years despite the efficiencies highlighted,” he says.
“As we have seen how the market for stocks has grown since online trading became available, we can already visualise the immense possibilities that online trading for bonds holds,” he adds.
With the Covid-19 pandemic, working from home arrangements and remote meetings have become the new norm. Companies are being pushed to accelerate the digitalisation of their workflow and processes.
With ‘Innovation’ as one of iFAST’s three DNA values, Bondsupermart is the latest exhibition of its continued efforts to disrupt the investment space in terms of building competitively-priced solutions for investors.
