Members of the consortium that launched the system in June are deciding whether to cut financial support to BondBook, or find a way to reduce their costs related to the money-losing firm.
After the terrorist attacks BondBook suspended rules that compelled its backing investment banks to use the system for a set amount of trades every week.
Predictably, transaction volume fell and liquidity dried up – at a time when bond dealers, are looking for ways to cut costs in the face of a slowdown. And Bondbook is particularly vulnerable since most of the larger financial firms back more than one of the many competing electronic bond-trading systems.
BondBook dealer-backers include:
- Goldman Sachs
- Morgan Stanley
- Merrill Lynch
- Credit Suisse First Boston
- Lehman Brothers UBS Warburg
- Deutsche Bank and
- Citigroup’s Salomon Smith Barney unit
Through the beginning of August 2001, only $10 billion in trades occurred over the system.