A 12-point recommendation plan to advance Australia’s corporate bond market is perfectly aligned with the ABE’s core business model.

Since launching just five years ago, the Australian Bond Exchange has opened up a major addressable market by expanding access for retail investors to buy and sell bonds.

In the 2021 financial year, it facilitated almost $10bn worth of bond transactions – almost double the year before with continued strong growth into FY22.

And with a well-established business model in the Australian market, the company is now moving towards an IPO as part of the next phase in its broader growth strategy.

In that context, the ABE got some good news in this week, following the release from the House of Representatives Standing Committee on Tax and Revenue called ‘The Development of the Australian Corporate Bond Market: A Way Forward’.

 

Perfectly positioned

In preparing its report, the committee tabled 12 recommendations aimed at supporting the development of a more active corporate bond market.

Each recommendation is aimed at “unleashing the considerable power of the corporate bond market in Australia,” Committee Chairman Jason Falinski said.

In line with that target, many of the proposals put forward were aimed at fostering simpler access and expanding the pool of investors with active involvement in the bond market.

Which is also why it reads as something of a “wish list” for the Australian Bond Exchange, CEO Bradley McCosker said.

Providing efficient access to corporate bond markets that is fully regulatory compliant while also offering improved tech solutions is exactly where the ABE has carved out its successful business model.

So it goes without saying that further policy initiatives to foster those improved outcomes align perfectly with the ABE business model.

In fact, a lot of the report suggestions are already being implemented on the ABE’s platform.

Among the 12 recommendations, of particular note was the proposal to lower the minimum parcel for corporate bond investments to $1,000, in order to “improve accessibility to more investors”.

In turn, another of the Committee’s 12 recommendation was to provide “access to timely and useful information about corporate bonds”.

The ABE also provides live market data distributed directly through its partnership with the IRESS trading platform – a feature which helps bring increased transparency to the market.

“A lot of bond trading is done ‘over the counter’ (OTC) and market data is rare in that environment,” McCosker says.

“In fact, investors in the know have often made money on that information asymmetry. But a key feature of our platform is that we share that information with mums & dad investors.”

“So in effect, a lot of the recommendations related to the industry we’ve already built in our offering, and the partnerships we’ve made reflect that.”

Still, the regulatory support for the industry provides an exciting backdrop as the ABE prepares for its ASX listing in late 2021.

And for McCosker, the goal remains the same; to provide a seamless and secure platform for everyday investors to generate returns on the corporate bonds of Australia’s biggest and best-known companies.

Australian Bond Exchange Holdings Limited (Company) is the issuer of the securities on offer under a prospectus lodged with ASIC. A copy of the prospectus for the offer is available on the Company’s website at https://www.bondexchange.com.au/investor-relations/ . The offer of the securities will be made in, or accompanied by, a copy of the prospectus. A person should consider the prospectus before deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the prospectus.

This article was developed in collaboration with the Australian Bond Exchange, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.