TrueEX has launched the first execution venue for real-time execution, processing and novation of non-cleared interest rate swaps.
By streamlining the workflow, trueEX is defraying much of the significant complexity and operational burdens arising from mandatory margining of non-cleared swaps, which has already been implemented in the U.S., Canada and Japan and due to go live in Europe in Q1 2017.
The trueEX innovation allows dealers and their buy-side clients to immediately benefit from full transparency of economic details, certainty of execution, and a central venue for novation, the process of transferring or “stepping out of” swaps. By providing a standardized electronic protocol to communicate the trade information, pricing, credit support annex (CSA) details and margin payments, the trueEX platform enables streamlined and accurate negotiation and assignment of unlimited numbers of swaps. This vastly improves the current costly, time-consuming and error-prone manual process for transacting non-cleared swaps, which represent as much as 30% of the entire swaps marketplace.
“We are very pleased that innovative firms like trueEX are responding to pressing needs in the fixed income markets,” said Ken Lester, Managing Director at NISA Investment Advisors, a leading fixed income and derivatives asset manager. “Introducing much needed efficiencies, automation and scale for non-cleared derivatives helps all market participants adjust to margin, capital and regulatory changes that are taking place. The development also lays the foundation for additional improvements that will be needed in the swaptions, total return swaps and repo markets. We are excited to work with trueEX to help in this endeavor as they have proven to be very capable of creating platforms that greatly enhance the user experience.”
"In an environment where staying at the forefront of trends in ecommerce remains key to success, Societe Generale is proud to partner with a market leader like trueEX,” said Barry Cohen, Managing Director at Societe Generale. “This new platform helps drive our leadership position in non-cleared currencies, where we were the first dealer to transact dealer-to-client IRS in PLN, MXN and BRL via trueEX. Moreover, trueEX helps us manage a significantly more efficient and cost-effective workflow."
“This is a watershed moment for the non-cleared swaps market,” said Christina Landry, Head of Product Development at trueEX Group LLC. “By opening up the marketplace to more efficient execution and processing, we can vastly improve the experience of trading and managing these systemically important instruments for both the front and back office.”
Non-cleared (or bilateral) derivatives are customized to clients’ needs and because they are tailored to suit the liability profiles of institutional investors, they play an important risk management role.
trueEX has been a leader in the execution and process of interest rate swaps since the introduction of mandatory SEF trading in 2013. Its pioneering approach to developing new products and services has resulted in more than 20 dealers and 80 buy-side institutions taking advantage of functionality that includes flexible RFQ, full STP and execution via its trueFIX API, and direct clearing.
As a result of its ongoing innovation, trueEX commanded more than 20% of all dealer-to-client execution of interest rate swaps on SEFs in October 2016, more than 5 times the level of 6 months ago.