Tradeweb, a leading global provider of online markets, today announced that the first electronic swap trade on a multi-dealer platform has been centrally cleared by an institutional client.
This follows the completion of electronic links from Tradeweb to the major derivatives clearing houses. Institutional clients are now able to fully automate their workflow on Tradeweb - from trade execution through clearing, enabling institutions to better manage operational, systemic and market risk.
To date, Tradeweb has integrated with ICE Trust and ICE Europe via ICE Link, and CME Clearing for the clearing of credit default swaps (CDS). In addition to these interfaces built for its CDS business, Tradeweb has further developed connectivity to MarkitSERV, a global, electronic OTC derivative trade processing company. Similar to CDS, clients are able to communicate to the platform's MarkitWire service for interest rate swaps (IRS), for onward transmission to LCH.Clearnet's SwapClear facility.
In addition to being able to clear trades through Tradeweb's links to central counterparties, over 380 leading global clients are already using a trading application programming interface (API) to link their internal systems with Tradeweb's electronic markets. Tradeweb has direct relationships with more than 20 of the major system vendors and a large number of smaller and proprietary systems.
The completion of the clearing house links follows a surge in electronic trading on Tradeweb's global swaps platform. Total global notional swaps volume since the introduction of the platform in 2005 now exceeds $5 trillion from more than 50,000 trades. This represents a compound annual growth rate of 55% in DV 01 (delta), the dollar value of a one basis point change in interest rates. Currently, sixteen liquidity providers make markets to more than 150 institutional clients.
"The industry is at the threshold of a fully-integrated electronic trading workflow for OTC derivatives," said Lee Olesky, CEO of Tradeweb. "The development of these links represents an important step towards a more automated marketplace, which will reduce systemic risk and promote te transparency, efficiency and prevention of market abuse that global regulators and market participants are seeking."
"ICE Link is pleased to work with Tradeweb to provide customers with a seamless flow from electronic execution to clearing. Tradeweb can help grow dealer and buyside participation through ICE, reinforcing our role in bringing the leading risk management and clearing solutions to the CDS market," said Clive de Ruig, Global Head of ICE Processing.
"The combination of Tradeweb's dealer-to-client e-trading platform with CME Clearing offers clients greater choice for transacting their OTC business," said Kim Taylor, President, CME Clearing. "As a result, our clearing solution becomes even more compelling to the world's leading asset managers as well as other clients around the world."
"We are pleased to link with Tradeweb to provide market participants with a more efficient workflow for trading and processing OTC derivatives," said Jeff Gooch, CEO of MarkitSERV. "This underscores our ability, as a neutral platform, to manage the complexity of the new environment and work with trading platforms to reduce operational risk post-trade."
"There has been a rapid increase in the OTC derivatives trading activity recently and the need to improve operational efficiencies has become more marked. Together with Tradeweb we are addressing market demands for more flexible and automated solutions in processing interest rate swap trades," said Roger Liddell, chief executive of LCH.Clearnet.
With the links in place, institutional investors are now able to take advantage of seamless trading and processing of CDS and IRS transactions on Tradeweb. This prepares the industry for the use of central counterparties to clear trades.