Bloomberg announced today that its multi-asset class swap execution facility (SEF), Bloomberg SEF LLC, has completed the first-ever cleared bunched derivative trade.
The trade was executed by MKP Capital Management LLC (MKP Capital) through its futures commission merchant (FCM) Credit Suisse Securities (USA) LLC (Credit Suisse) and CME Clearing provided clearing services.
A bunched trade combines a number of smaller or uniquely-sized trade orders into a single order. It is initially cleared and then later allocated across multiple accounts. Previously, a bunched trade could not be executed on a SEF. This new trading architecture now enables buy-side investors to execute these trades on a SEF without significant change to their existing workflow.
"Change in the derivatives market is occurring at a rapid pace and bunched SEF trading offers a new path forward," said Ben Macdonald, Bloomberg's Global Head of Product and President of Bloomberg SEF LLC. "Developed in collaboration with industry participants and based on market demand, we created this functionality to enable our clients to seamlessly execute, clear and then post allocations on Bloomberg's SEF."
Since launching on October 2, more than $160 billion in volume across credit default swaps, interest rate swaps, and foreign exchange and commodity derivatives has been executed on Bloomberg's SEF.
John Dabbs, Head of US FCM at Credit Suisse, said, "Clients are demanding services that enable swift and efficient bunched order execution, clearing and post-trade allocation; our services deliver that."
"As an asset manager with multiple funds, the ability to transact and manage risk efficiently is critical to our business," said Thomas DeVita, Chief Operating Officer of MKP Capital. "This new workflow will allow us to be in compliance with the latest regulatory changes while still executing trades seamlessly via SEFs."
Michael O'Connell, Managing Director at CME Clearing, said, "As over-the-counter trading embraces the efficiencies which SEFs represent, clearing innovations for allocations, one of the most critical steps in the post-trade processing cycle, brings needed confidence to FCMs and their customers."