The Royal Bank of Scotland has booked the first interest rate swap give-up trades on SwapsWire’s PBWire platform, acting as prime broker for a large Connecticut-based hedge fund.
In a give-up trade, a client executes a transaction at a price supplied by an executing broker, but then faces their prime broker as counterparty. The prime broker mirrors the transaction with the executing broker as counterparty, effectively intermediating between the two.
RBS Prime Brokerage has integrated PBWire into its internal systems such that give-up trades entered by executing brokers (Bank of America in this instance)are automatically matched and confirmed without the need for manual intervention. Completing the give-up process on PBWire also completes the documentation process entirely automatically. There is no need for a separate set of confirmation documents to be drafted, exchanged and matched.
A representative of the hedge fund client, who has requested anonymity, says the company settled on RBS and Swapswire after conducting a year long study into its OTC prime brokerage options.
"The combination of RBS Prime Brokerage and SwapsWire gave us what we desired in terms of full automation, which we believe will significantly reduce the possibility of operational and trading risk in the OTC space," he states. "In addition, it will allow our traders and operations personnel to spend their time on more value-added activities to the business. We will now be able to fully tie-out trades and positions of our OTC book on trade date."
Seven prime brokers have so far committed to using SwapsWire for OTC give-ups, says CEO Chip Carver.
"This approach to handling give-ups quickly and efficiently required considerable investment, and the results will now start to show as everyone involved is freed to focus on execution without worrying about operational issues," he adds.