In another effort to improve straight-through processing of derivative products, Bloomberg announced its plans to recruit commercial banks and sell-side firms to form a new company that would operate a multi-bank electronic trading platform for bank-to-client transactions in interest-rate derivatives products.
The banks involved at the outset include ABN Amro, Barclays Capital, Calyon Financial, HSBC, JP Morgan and Societe Generale, but Bloomberg is still recruiting others for the initiative. The name of the company was not disclosed.
Traders now have the ability to trade interest rate derivatives on-line with Bloomberg SwapTrader, the first live multi-dealer request-for-quote trading system. The move is mean to enhance pricing transparency and execution quality in the interest rate swaps market, which is the world’s largest over-the-counter derivatives market. The news comes two months after Bloomberg announced a direct link between its SwapTrader platform and the London-based SwapsWire network.
“For the first time, traders worldwide have access to a live multi-dealer interest rate swaps platform through Bloomberg SwapTrader,” said Russel Levi of Bloomberg. “The establishment of Bloomberg SwapTrader is a significant advance to further improved trading efficiency and pricing transparency in the interest rate derivatives market.”
“As the market matures, clients and dealers are supporting a multi-dealer platform with aggregated liquidity and extended STP efficiencies,” Levi continued. “Through Bloomberg SwapTrader, swaps dealers are able to provide an unparalleled breadth of liquidity and market experience to their clients. Consistent with Bloomberg’s commitment to add value to Bloomberg users and to the markets, Bloomberg SwapTrader is free of charge to Bloomberg users, and there is also no charge for dealer participation.”
Bloomberg SwapTrader operates on a request-for-quote model. Bloomberg terminal users are able to obtain pricing quotes simultaneously from up to three banks and then execute the trade at the best quoted price. Using straight-through processing, trade confirmation is handled electronically to improve efficiency and reduce the risk of pricing and trading error. Trade data is readily accessible to allow easy integration into a customer’s settlement and risk management systems.