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Johannesburg - One of the biggest fixed income fund managers
in the country stunned an audience of government and market professionals on
Wednesday when he labelled the current system of fixed income pricing and
placement as close to being "corrupt".
Andrew Canter, chief investment officer at Futuregrowth, a
R110bn fixed income fund manager, said the current system operated on a
"big buddy" basis where a small group of players needed to be kept on
side for fear of falling foul of them and getting poor prices.
He referred to "back channels" of communication
and reliance on the telephone as causing a "bad market".
Canter, together with a committee of investment
professionals lobbying for change, is calling for a central order book
to be implemented urgently, with better pricing then improving efficiency.
"At the moment the market is constipated," he
said.
The JSE bought the bond exchange in 2009 and is known to be
pursuing moves to a central order book and other changes to improve
transparency and liquidity.
But Canter also said the process of placing bonds in SA
needed more transparency as "good faith" clauses in contracts were,
in some cases, being given short shrift and effectively replaced with
"lying clauses".