Icap (IAP.L), the world's premier interdealer broker, announced that it has launched a new facility on the electronic fixed-income platform BrokerTec to enable customers to send pre-agreed bilateral Italian repo trades to Monte Titoli, the Italian settlement agent, and novate to the respective central counterparty (LCH.Clearnet SA or Cassa di Compensazione e Garanzia SpA).
This service facilitates central counterparty access in Italian repos for market participants that trade via any voice broker or direct, further mitigating counterparty risk. This service is available for all of BrokerTec's participants that are signed to the central counterparty for Italian government bonds.
John Edwards, Director of Fixed Income, ICAP Electronic Broking, said "The dealer community has been actively looking at ways to reduce its counterparty risk in Italy, as until now there has been no way to novate bilateral or voice brokered trades to the CCP. This facility supports the market efforts to reduce risk and provide a full post-trade feed via the BrokerTec architecture, with its flexible front end application and broad footprint in the repo market. This should further improve the efficiency and functioning of the Italian repo market."
Simon Parkins, Global Head of Repo Trading at BNP Paribas added; "BNP Paribas is a very active participant in the European repo market. As such any move to improve the robustness of the repo market using where possible the services of a central counterparty will receive our full support. I am particularly pleased therefore that interventions through various industry discussions, including the European Repo Council, have resulted in such a timely and efficient solution to the requests of market participants. We look forward to continuing discussions with market participants and infrastructure providers to further improve the efficiency and security of such a vital part of the capital markets."
BrokerTec is a highly robust and scalable platform; widely installed across Europe and already used by banks to trade European government bonds and repos. The BrokerTec platform is supported by state-of-the-art technology, which is regularly enhanced to ensure the highest levels of reliability and customer satisfaction. BrokerTec's straight through processing (STP) application automatically processes trades, allowing for enhanced execution and settlement, while simultaneously reducing costs and inefficiencies associated with traditional paper-based methods.