CME buys Swapstream for $15m
05 July 2006 | 9791 views | 0
The Chicago Mercantile Exchange (CME) has acquired Swapstream, the London-based multilateral electronic trading platform for interest rate swaps, for around $15 million.
CME says the acquisition will expand its presence in the over-the-counter (OTC) interest rate derivatives market.
Under the deal CME is paying $6 million and assuming $9 million in outstanding debt to acquire the Swapstream business.
Launched in 2003 by Swiss broker Gottex, Swapstream is a neutral, inter-dealer platform that currently supports electronic trading of Euro and Swiss Franc denominated medium-term and long-term interest rate swaps. USD and GBP swaps are expected to launch on the platform soon.
The system enables dealers to interact with one or more banks or brokers to build their own marketplace and distribute their liquidity. The platform also features a permission-based system that allows market participants to publish customised prices and pricing curves based on both credit and counterparty considerations.
Swapstream is delivered to customers over a secure private network from Deutsche Börse facilities in Frankfurt.
Craig Donohue, CME chief executive officer, says the acquisition "diversifies our global interest rate business, brings us into the fast growing $164 trillion in notional value OTC interest rate swaps market and moves us further out the interest rate curve in terms of our product offering".
Donohue says the exchange will also explore potential synergies between Swapstream and the CME Clearing 360 offering, which allows OTC market participants to 'substitute' an interest rate swap for CME Eurodollar futures.
Following the acquisition, Swapstream will operate as a wholly-owned subsidiary of CME and will remain based in London.
Swapstream chief executive officer Stephane Rio will continue to lead the organisation with Andre Keijsers and Florentin Bosse remaining as chief financial officer and chief technology officer respectively.