Online bond trading platform MarketAxess has launched the first client to multi-dealer electronic credit default swap (CDS) index trading system in London and New York.
CDS index trading is offered in conjunction with cash trading on MarketAxess' European and US high-grade corporate and emerging markets bond platform.
MarketAxess worked with eleven global dealers - including ABN Amro, Banc of America Securities, Bear Stearns, BNP Paribas, Goldman Sachs, JPMorgan, Merrill Lynch, Royal Bank of Scotland and UBS - to develop the platform. MarketAxess says eight of these dealers have completed their systems integration and will be live on launch day, with the remaining three dealers and others expected to be live "within weeks".
The network also worked with the Depository Trust & Clearing Corporation's Deriv/Serv subsidiary to integrate the front-end trading system with back-end confirmation and matching facilities. MarketAxess has also subscribed to Markit's reference entity database (RED) database, which it says will help it achieve straight-through processing from pre-trade to confirmation.
Richard McVey, chairman and CEO, MarketAxess, says: "From pre-trade to post-trade, our solution is designed to eliminate trade errors and discrepancies through a robust trade verification and auto-matching and confirmation process."
In conjunction with the launch, MarketAxess has hired Andy Brindle, most recently global head of credit derivatives at JPMorgan Chase, as a senior advisor for the credit derivatives business.
A rival CDS index trading platform developed by Thomson TradeWeb is expected to launch later this year. The firm said in May that it had teamed with JPMorgan, Goldman Sachs and Morgan Stanley to launch an electronic auction-based trading platform for CDS indices.
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.