Swapswire, the much-delayed electronic dealing system for interest rate derivatives processing, is to go live in October with Icap signed up as the first interdealer broker on the network.
SwapsWire has been established by a consortium of 23 banks to provide an integrated straight-through-processing (STP) infrastructure for the interest rate derivatives market. It will enable participants to transfer transaction information swiftly and securely and to legally confirm executed transactions between counterparties, using the FpML protocol standard.
The system was initially scheduled for live launch in the first quarter of 2001 but has suffered successive regulatory and technical hitches.
Chip Carver, installed as SwapsWire chief executive officer in April, comments: "Now that the development work is finishing up and testing is proceeding smoothly at SwapsWire, the banks are focusing on maximising the flow of transactions across the network. The current labour intensive, non standard, and manual confirmation processes will be replaced. By bringing Icap’s transactions onto the system there is an immediate benefit to the user banks."
The system will begin with interest rate swaps in eight currencies (Euro, Sterling, Japanese Yen, US Dollar, Swiss Francs, Norwegian Kroner, Swedish Kronor, Danish Kroner). It will initially go live in Europe with fifteen to twenty banks and brokers in multiple cities, says Carver. The US launch will follow before the end of the year, he adds, after which the system will be deployed globally.
David Casterton, managing director of Intercapital Europe, a subsidiary of Icap, says: "We are planning to use the system to transfer trade information immediately after the trade has been completed to reduce errors and allow the banks to gain efficiencies in their front, middle and back office functions."