Twenty primary dealers in euro-denominated government securities have banded together to form the European Primary Dealers Association, and will kick-off business with a meeting to discuss best practices at the end of this month in London. The move comes a few months after the U.K. Financial Services Authority investigated a controversial government bond trade by Citigroup (BW, 8/23). Rich Herman, European head of rates at Deutsche Bank in London and co-chairman of the new body, said the initiative has been in the works since June, so the Citi incident did not come up in any preliminary discussions within the group or with any of the European regulators. Creating a Eurozone group is long overdue, he added, noting the euro government bond market has mushroomed to €3.2 trillion since its inception in 1999.
Primary dealers used to specialize in one currency, but now each dealer operates in different sovereign markets, increasing the need for greater coordination and the possibility of spreading best practices. Herman said the group will focus initially on settlement and clearance issues and decreasing operational risk.
The EPDA is affiliated with The Bond Market Association.
