Australian Interest Rate Markets

The interest rate market is essential to the health of the financial markets and the Australian economy. Its impact and influence affects all levels of corporate and personal finance from investment decisions at large multinational corporations, to the rates offered for fixed and variable mortgages, right through to the price of goods in your local supermarket.

In its simplest form, an interest rate reflects the price a lender (investor) asks a borrower to pay for using their money. Despite this apparent simplicity the factors determining real life interest rates can be complex. With $40 trillion traded annually, even small increases in efficiency and rate improvement can have an enormous impact.

All interest rate products require a risk free benchmark as their foundation. In Australia this is the Commonwealth Government bond curve. In the primary market the government is the borrower and its bonds are competitively auctioned, through Yieldbroker, to bidding market participants. These bonds are then bought and sold regularly, again through Yieldbroker, in the secondary market. With the government bond curve as a reference, the financial markets can price various other credit, liquidity, and sector risks as well as many other types of exposure.

Interest rate derivatives are used extensively by assets managers, pension funds, banks and government/semi-government entities both here and around the globe to hedge against the risk of adverse interest rates moves. For example, they are the key instrument allowing banks to offer fixed rate home loans to borrowers or to risk manage the overall exposure of their large institutional clients.

Yieldbroker’s Role

We operate transparent electronic markets, bringing together the leading participants to generate the best trading opportunities and unrivalled liquidity.

Our customised markets are tailored to match the requirements of a broad range of local debt securities and derivatives; combining the capabilities of our in-house IT developers and the market knowledge we gain from ongoing dialogue with our clients.

Yieldbroker has the agility to introduce better trading solutions as markets evolve. For 18 years we’ve pioneered the efficiencies of electronic trading and continue to respond to changing market conditions and shifting financial regulation.

We also provide connectivity that facilitates straight-through-processing (STP) and transaction reporting; improving transactional efficiency and reducing operational and compliance risk.

Our trading platform is seamlessly linked to order management systems like BlackRock’s Aladdin and Charles River, pricing and risk management systems like ION and post-trade systems like Markit Wire and Omgeo.

With flexible trading solutions tailored for each market we operate and systems that support efficient transaction processing, Yieldbroker is the comprehensive dealing solution for Australian debt securities and interest rate derivatives.

Read more about the advantages of electronic trading