MTS EU: A dedicated interdealer order book for European Union debt instruments

MTS, part of Euronext, successfully launched MTS EU at the beginning of the month, the latest bond market to go live on the MTS Cash Domestic Markets MTF. With the launch of MTS EU, members of the EU Primary Dealer Network can now benefit from a central limit order book, which makes for a highly liquid, transparent, and efficient interdealer bond marketplace. This is the 22nd market to use MTS interdealer trading technology and services to date, and an important addition to the domestic markets we host in the EU and beyond.

An important pool of liquidity

The European Commission’s NextGenerationEU programme has established the EU as one of the largest debt issuers in the Euro zone. MTS EU plays a central role in supporting liquidity in the secondary markets for EU bonds, as a recognised interdealer order book where primary dealers can carry out their market making activities.

The launch of MTS EU has been a great success, with trading volumes picking up right from the very first day of operation and averaging close to €1bn daily. The platform has also already been adopted by most market makers in the EU Primary Dealer Network, helping to create a deep pool of electronic interdealer liquidity. This impressive start is of course highly encouraging for the prospect of more liquidity going into EU debt instruments.

Features and benefits for users

One of the most notable features of MTS EU is that it enables dealers to access a reliable, independent pricing reference based on the fully firm and executable prices streamed by the members of the EU Primary Dealer Network. Dealers can therefore benefit from a more accurate and consistent price discovery. It’s worth noting that this feature has complementary benefits for investors.

Through our technology, primary dealers in the EU contribute to and access a quote-driven market, leveraging the central limit order book trading protocol, with trades automatically submitted for processing to the relevant CCP or CSDs on behalf of participants. Additionally, MTS will report quoting performances to the European Commission on behalf of primary dealers when requested. Through automated straight-through-processing, MTS EU greatly reduces the time required for dealers to clear and settle transactions in EU securities.

A cornerstone for the secondary market in EU bonds

With MTS EU, dealers can be sure of access to prices and trading, even in times of market volatility. And as it leverages our established technology and proven expertise in providing regulated electronic trading venues for fixed income, it is an environment that’s ready to support the scale of the issuance and meet the EU’s goal of carefully managing its borrowing objectives.

For MTS as a business, the selection of MTS EU for the EU Primary Dealer Network is a vote of confidence from what is an increasingly relevant borrower. Moving forward we look forward to supporting its ambition to fund itself optimally. We also relish the opportunity of working with the European Commission and users of MTS EU to ensure sustainable liquidity and price discovery in this important market.

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