Electronic swaps boost for Icap; forward FX under testing

Electronic swaps boost for Icap; forward FX under testing

Interdealer broker Icap is reporting strong market support for electronic auto-trading of short term interest rate swaps called Eonias (Euro Overnight Index Average Swaps) over its i-Swap platform.

Electronic broking of Eonia (the short end of the Euro interest rate swaps market) was launched in September 2004. Volumes have grown steadily, says Icap, and during the last four weeks electronic trading on the system has achieved an average of EUR3.9 billion 1MEQ1 per day.

The i-Swap system - which is based on Computershare's X-stream electronic trading system - is installed in more than 45 Icap client sites in Europe. 17 banks are currently trading electronically, says the broker, and a further 14 are preparing to use the system.

Michael Spencer, Icap's chief executive officer, says: "The launch of the i-Swap platform is Icap's response to our belief that electronic broking of euro swaps is inevitable and imminent. Trading volume growth since the launch in September have so far been very encouraging, bringing new business in addition to our existing voice only business."

Icap is also testing an electronic broking system for forward foreign exchange, i-Forwards, with a small number of London clients. Live trades have been executed in each of the launch currencies; Euro, Sterling and Yen, says Spencer. By early 2005 a further 25 banks are expected to be added to the system.

At its interim results statement for the six months ending September 2004, Icap yesterday reported a 35% increase in turnover in electronic broking to £39.9 million, with profit rising from £1.2 million to £9.4 million. In contrast, voice broking felt the impact of rising or static interest rates, with profit declining to £60.9 million from £72.1 million in the previous year.

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