Wall Street backing brings an E-bond firm instant inventory and access to clients via traders using the Internet bond brokering systems.Large firms also bring deep pockets for the long, slow and expensive journey before electronic trading kicks into full gear.

In the municipal bond market alone, participants expect massive attrition in the E-bond arena, considering that an estimated 60 firms say they will sell tax-exempt securities online.

Of those trading facilities, "I believe there will be nomore than 15 firms with the infrastructure to provide live instant prices on a large scale," said Tom Vales, chief executive officer of municipal bond Internet exchange MuniCenter.

Of the 15 survivors, Vales predicted only three or fourwill prevail.Constantine Mallas, senior trader and vice president with the municipal department at T Rowe Price in Baltimore, said the number of firms will have to be winnowed down simply because "there is no way someone on our side (the buy side) can look at 60 sites."

"The site with the largest inventory will attract the mostusers," Mallas said. A system's functionality and offering prices will also remain of paramount importance to mutual funds, he added.

As a result of fund concerns about liquidity, firms have been rapidly boosting the number of participating broker-dealers on their platforms.The taxable and tax-exempt bond online platform BondDesk,started by Goldman Sachs Group, Bear Stearns & Co and PaineWebber Group, added 10 new equity partners and another 11 new participating broker-dealers on Aug 9.Meanwhile, Market Axess, the taxable securities platform of Chase Securities, Bear Stearns and JP Morgan & Co, has added Deutsche Bank, ABN Amro and UBS Warburg Dillon Read to its trading facility.

-- (Reuters)