MarketAxess joins credit derivatives fray

MarketAxess joins credit derivatives fray

Two weeks after TradeWeb announced plans to launch an online market for credit default swap (CDS) indices, rival platform MarketAxess says it is developing its own CDS index dealing system which will be launched later in the year.

MarketAxess is working with eleven global dealers, including ABN Amro, Banc of America Securities, Bear Stearns, BNP Paribas, Goldman Sachs, JPMorgan, Merrill Lynch and Royal Bank of Scotland, to develop the client-to-dealer electronic trading platform for credit default swap indices.

The network is also working with The Depository Trust & Clearing Corporation's Deriv/Serv subsidiary to integrate the front-end trading system with back-end confirmation and matching facilities.

CDS index trading will be offered in conjunction with cash trading on MarketAxess' European and US high-grade corporate and emerging markets bond platform. The system will be launched in the second half of 2005.

Rival network TradeWeb is teaming with JPMorgan, Goldman Sachs and Morgan Stanley to develop an alternative auction-based system, also scheduled for launch in H2, 2005.

According to stats from the British Bankers' Association the global market for credit derivatives grew an estimated 137% in 2004 to more than $8.4 trillion at the end of the year, up from $3.5 trillion at year-end 2003.

Richard McVey, CEO, MarketAxess, says: "As credit derivatives continue to play an increasingly important role in the fixed income credit markets, the development of this platform is a logical progression for us in the trading of corporate and emerging market bonds."

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