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Single Dealer Platforms vs MDPs -- debate heating up

07 October 2010  |  3708 views  |  0

Aité group has just published the first authoritative report on single-dealer platforms from a leading analyst. It says that "single-dealer platforms are a crucial component of addressing the increasing OTC market complexity" and notes a strong trend in this direction.

At the same time, panellists at a recent FX conference argued that the market is is moving away from SDPs towards MDPs.

They can't both be right, and the hard numbers support the SDP advocates. It appears that in the real world, the trend is clearly towards SDPs in both FX and fixed income.

Certainly my impression, from discussing this issue with a wide range of banks over the last few years, is pretty clear. Three years ago, only a small minority of banks were investing heavily in building out their SDP capability. Now it's unusual to come across a Tier 1 or Tier 2 bank that isn't.

In the swaps world, of course, Dodd Frank poses a big question mark over what forms of trading are going to be permitted. But this doesn't seem to be deterring most banks from pushing forwards with fixed income offerings.

I'd be interested in views from the marketplace on this increasingly hot topic. What do you think?

 

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