Barclays Capital has started US dollar interest rate swaps trading on BARX (Barclays Automated Real-time Execution), the firm’s single dealer electronic trading platform on the Bloomberg Professional service. The bank says this is the first time ever for electronic trading of US dollar interest rate swaps provided by a single dealer.
“We’re delighted to be the first to bring this innovation to the US market,” says Harry Harrison, head of fixed income trading for Barclays Capital in the Americas. “The trading of swaps has reached a point of maturity and routine practice, such that it is now possible to make it electronic. This brings transparency to an otherwise opaque market and provides the efficiency and low cost benefits of electronic trading. Last summer, we were the first to introduce single dealer electronic trading of interest rate swaps in both Euros and Sterling from our London office. Today’s announcement extends that innovation to the US dollar swap market.”
The trading of US dollar swaps has grown to be one of the largest markets in the world, with the US market exceeding the size of any single country in terms of swaps trading. As of December 31, 2003, the amount of contracts outstanding in US dollar swaps was $46.2 trillion — up from just $13.8 trillion five years ago, at the end of 1998. Despite the size and sophistication of this market, very little of this activity has historically been done electronically — and Barclays Capital estimates that over 50% of the volume is sufficiently standard that it could be done electronically. Following the Barclays Capital introduction last summer in London of electronic trading of swaps denominated in both Euros and Sterling, over 30% of the firm’s client swap trades for these currencies are now executed across BARX.