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Fund manager says bond market 'corrupt'

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".

 
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