Tradeweb Completes First Compression Trade on TW SEF

Tradeweb Markets has completed the first fully electronic compression transaction of cleared derivatives trades on its swap execution facility (SEF).
By Janet Du Chenne(59204)
Tradeweb Markets has completed the first fully electronic compression transaction of cleared derivatives trades on its swap execution facility (SEF).

Investment manager Arcem Capital successfully executed a pool of interest rate swap (IRS) trades as one or a zero line-item transaction with Deutsche Bank that was cleared by LCH.Clearnet’s SwapClear.

Compression trade functionality on TW SEF allows for compression packages of up to 200 trades into one or a zero line item trade using the tool. An investor can quickly net or terminate trades and increase available credit at their derivatives clearing organization (DCO) by inputting lists of offsetting trade information using up to 85 standardized fields.

“By creating a standardized protocol for netting cleared derivatives, our compression tools generate enormous efficiencies for what used to be a very manual process for pricing and executing a large number of swap trades,” said Billy Hult, president of Tradeweb Markets. “As institutional investors actively manage their derivatives positions and available credit in a centrally cleared world, Tradeweb will continue to provide innovative solutions that improve access to liquidity and help reduce systemic risk.”

Users of the compression trade functionality can easily review or export all line-item data post-execution into their risk management systems, an essential component to evaluate overall credit exposure at a DCO while reducing overall systemic risk.

“Compression is a highly valuable tool for us to quickly package interest rate exposure we are looking to net or terminate at the clearing house,” said Luis Ontaneda, director of Operations at Arcem Capital. “The Tradeweb solution facilitates the execution of these trades, while boosting productivity as we move toward more electronic derivatives trading on SEFs.”

“We are pleased to work with Arcem Capital to execute a trade that validates Tradeweb’s unique derivative compression workflow,” said Thomas Hartnett, Head of Rates and Investment Grade Credit Americas at Deutsche Bank. “Efficient operational solutions are key for market participants as they adapt to a new market structure and we’re working closely with SEFs like Tradeweb to manage that activity in an effective and compliant way.”

Tradeweb Markets serves the dealer-to-customer markets through the Tradeweb institutional platform, inter-dealer trading through Dealerweb, and the retail fixed income community on Tradeweb Direct.

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