PLP Spotlights: Insights from Banca Sella
To celebrate Italian holding company Banca Sella becoming the latest Prime Liquidity Provider (PLP) to join LuxXPrime, we sat down with its Head and Co-Head of Sella Finance Markets, Matteo Rolle and Silvia Prina Mello to learn more about the company and its ambitions.
Our activities include commercial and retail banking, private banking and wealth management, corporate and investment banking, payment systems, open banking and information technology services.
We foster, operate and are an open innovation ecosystem committed to sustainable growth. We give support to the ideas and entrepreneurship of startups and businesses through our Sellalab Innovation Centre. We have founded and stimulate the Italian fintech community - the Fintech District of Milan and launched the first open banking platform in our country.
We do all this by putting the interests of our customers before our own, aware that in a medium and long-term perspective, these interests coincide.
In Sella Financial Markets, we actively trade on domestic and international financial markets, guaranteeing shareholders a substantial return on risk capital. We contribute to the growth of our country by constantly providing liquidity to the financial markets to promote their efficiency. We have a strong presence in the fixed income market, retail and wholesale, with a special focus on Italian and European securities. In addition, we provide liquidity for ETPs and ETDs, certificates and stocks.
Joining LuxXPrime as a Primary Liquidity Provider is a strategic move to strengthen our presence in European electronic markets. We see LuxXPrime as an opportunity to diversify our portfolio by accessing new instruments and trading flows.
Moreover, our market-making expertise will contribute to improving market efficiency and liquidity. We are committed to narrowing bid-offer spreads in limit order books throughout the trading day, thereby enhancing overall market performance.
Over the last decade, we have witnessed a big technological push in fixed income markets with the adoption of cutting-edge market infrastructures tailored towards speed and efficiency. As a consequence, market participants are now required to invest in specialised resources and advanced technological infrastructure.
It’s not enough to have good traders. It is mandatory to invest in excellent software developers and IT professionals who can provide the best solutions to market operators in order to achieve the best performances.
Regarding technology, the automation of bond trading will help improve operational efficiency and the use of artificial intelligence and machine learning will bring an improvement in pricing and in risk management.
Those developments will be key to better manage spikes in volatility caused by geopolitical dynamics that are getting more and more unstable and prone to creating a larger gap between developed countries and the rest of the world.
Emerging markets, with higher GDP growth rates than developed economies, will attract more and more bond investors but they will require a much finer monitoring of risk.
In this very challenging environment, characterised by strong instability, central bank monetary policies, in particular those of ECB and the FED, will keep influencing the bond market while trying to keep yields and inflation rates on levels that are functional to the real economy.
Despite these challenges, bond markets are expanding and becoming more liquid than ever, offering attractive opportunities for investors.
Furthermore, many governments are introducing fiscal, and other, incentives to sustain investments in green projects.
That said, despite the fact that ESG investments can offer interesting yields, it is not always easy to balance social and environmental impact with profitability. Traders might find themselves in the difficult position of navigating sustainability and profitability to satisfy investors’ requests. It needs also to be pointed out though that ESG regulation is still in its infancy and it is continuously changing.
As a consequence, we need a governance system that can continuously adapt to changes in the regulatory landscape.
Can you tell us a bit about Sella Group's history and longstanding expertise in the Italian financial markets, particularly in fixed income instruments?
Matteo Rolle: Sella Financial Markets is the trading division of the Sella Group. At Sella Group, we have over 6,500 employees, we are present in 6 countries and have over 300 branches throughout Italy.Our activities include commercial and retail banking, private banking and wealth management, corporate and investment banking, payment systems, open banking and information technology services.
We foster, operate and are an open innovation ecosystem committed to sustainable growth. We give support to the ideas and entrepreneurship of startups and businesses through our Sellalab Innovation Centre. We have founded and stimulate the Italian fintech community - the Fintech District of Milan and launched the first open banking platform in our country.
We do all this by putting the interests of our customers before our own, aware that in a medium and long-term perspective, these interests coincide.
In Sella Financial Markets, we actively trade on domestic and international financial markets, guaranteeing shareholders a substantial return on risk capital. We contribute to the growth of our country by constantly providing liquidity to the financial markets to promote their efficiency. We have a strong presence in the fixed income market, retail and wholesale, with a special focus on Italian and European securities. In addition, we provide liquidity for ETPs and ETDs, certificates and stocks.
Looking ahead, what are Sella Group's long-term goals and strategies for its membership with LuxXPrime, and how do you envision this collaboration evolving?
Silvia Prina Mello: Banca Sella Holding is a leading market maker in Italian retail fixed income markets and also actively trades European government bonds in wholesale markets such as MTS.Joining LuxXPrime as a Primary Liquidity Provider is a strategic move to strengthen our presence in European electronic markets. We see LuxXPrime as an opportunity to diversify our portfolio by accessing new instruments and trading flows.
Moreover, our market-making expertise will contribute to improving market efficiency and liquidity. We are committed to narrowing bid-offer spreads in limit order books throughout the trading day, thereby enhancing overall market performance.
How do you view the current state of the bond trading market? What are the biggest challenges and opportunities at present?
Matteo Rolle: Bond markets are, in general, broadly efficient with a good liquidity available throughout the day thanks to the participation of both institutional players and retail clients.Over the last decade, we have witnessed a big technological push in fixed income markets with the adoption of cutting-edge market infrastructures tailored towards speed and efficiency. As a consequence, market participants are now required to invest in specialised resources and advanced technological infrastructure.
It’s not enough to have good traders. It is mandatory to invest in excellent software developers and IT professionals who can provide the best solutions to market operators in order to achieve the best performances.
What key trends and developments do you foresee shaping the bond trading market through 2025 and beyond?
Silvia Prina Mello: In the near future, fixed income markets will be influenced by technological innovation, monetary policy evolution and the geopolitical landscape.Regarding technology, the automation of bond trading will help improve operational efficiency and the use of artificial intelligence and machine learning will bring an improvement in pricing and in risk management.
Those developments will be key to better manage spikes in volatility caused by geopolitical dynamics that are getting more and more unstable and prone to creating a larger gap between developed countries and the rest of the world.
Emerging markets, with higher GDP growth rates than developed economies, will attract more and more bond investors but they will require a much finer monitoring of risk.
In this very challenging environment, characterised by strong instability, central bank monetary policies, in particular those of ECB and the FED, will keep influencing the bond market while trying to keep yields and inflation rates on levels that are functional to the real economy.
Despite these challenges, bond markets are expanding and becoming more liquid than ever, offering attractive opportunities for investors.
With the increasing emphasis on sustainable finance and ESG investing, what opportunities and challenges do you foresee for traders in 2025?
Matteo Rolle: Investing in ESG instruments can help traders and investors in diversifying their portfolios, mitigate risks due to exposure to traditional sectors. Green bonds and ESG funds offer the potential for stable returns, especially for those investors who prioritise environmental and social impact.Furthermore, many governments are introducing fiscal, and other, incentives to sustain investments in green projects.
That said, despite the fact that ESG investments can offer interesting yields, it is not always easy to balance social and environmental impact with profitability. Traders might find themselves in the difficult position of navigating sustainability and profitability to satisfy investors’ requests. It needs also to be pointed out though that ESG regulation is still in its infancy and it is continuously changing.
As a consequence, we need a governance system that can continuously adapt to changes in the regulatory landscape.
