Trad-X, a platform for the trading of global interest rate derivatives, has launched a new central limit order book (CLOB) for EurexOTC cleared products to coincide with the EMIR Frontloading date.
The CLOB will have an initial focus on the most liquid Euro interest rate swap tenors such as 2y, 5y, 10y and 30y swaps, associated spreads and flys, and BUND, BOBL and SCHATZ asset swaps.
The move is part of a series of new initiatives designed to boost liquidity and strengthen Trad-X’s presence in the global interest rate swap (IRS) market.
Trad-X will also run auctions to provide a transparent and liquid central counterparty (CCP) switch service between Eurex Clearing and LCH.Clearnet. The new service will enable participants to efficiently move positions from one CCP to another and optimise their margin exposure.
The launch of a CCP switch service for Euro denominated IRS follows the successful launch of a similar market for USD products on TraditionSEF – the CFTC-registered Swap Execution Facility (SEF) – where Trad-X forms the backbone of Interest Rate Swap CLOB liquidity. Since launching in 2014, TraditionSEF has become the leading SEF in the USD CCP switch market, accounting for the majority of all CCP basis volume.
Trad-X will also launch a new public reference page displaying EurexOTC cleared swap mid-markets underpinned by Trad-X’s irrefutable prices. The Trad-X CLOB receives continuous two-way streaming from a wide range of market participants – including 15 of the largest global market participants in the world. This unique reference page, which will assist market participants with issuance and pricing purposes, will be displayed under TREU on BLOOMBERG.
Dan Marcus (pictured), CEO of Trad-X, says: “Since launch we have set the industry standard for transparent and reliable pricing and believe there is a clear opportunity to pool our symbiotic strengths and further improve the trading and clearing experience. The addition of EurexOTC cleared products to the Trad-X universe, along with our award winning CCP switch service, provides users with greater post-trade flexibility and represents another example of Tradition and the industry developing solutions to increase cost efficiencies and liquidity in this market. Together, these initiatives will strengthen Trad-X’s position as the pre-eminent central limit order book venue for interest rate swap trading.”
“As an MTF we support fair and open access to all participants including market infrastructure providers such as Eurex Clearing. We believe the establishment of a transparent CLOB gives our customers greater choice and helps provide a fair and competitive environment.”
The average daily volume of EurexOTC Clear has increased by over 60% since the start of this year. With many clients being unique to Eurex Clearing a further significant increase is expected with the start of the phases of mandatory clearing.
Philip Simons, Global Head of Fixed Income Trading and Clearing Sales at Eurex, says: “We see strong demand from clients wanting to realise the benefits of switching positions and moving risk seamlessly between CCPs to efficiently manage and optimise their capital and margin. Trad-X’s excellent track record as the leading electronic IRS CLOB globally makes them a natural partner for this initiative.
“The biggest benefits result from clearing Euro interest rate derivatives at Eurex Clearing when combining existing liquidity in Eurex’s fixed-income futures with OTC IRS. The equilibrium that exists amongst our end client portfolios, with a natural balance of payers and receivers, ensures any pricing differential between CCPs is genuine and based on real market supply and demand factors.
“Using our expertise and experience in the risk management of listed and OTC derivatives we will continue to work on new initiatives to develop additional services and products that will provide further benefits to our clients and the market,” he concluded.