April 2007


Well everyone seems to agree that Swaps and CDS e-trading by the buyside is set to take off so it is logical more and more players will enter the market. Add Creditex’s Q-Wixx for single-name CDS lists and…..soon it will make the five ECN FI Cash market seem sparse! So much for consolidation.

18/04/2007 Hedge Funds To Be Targeted By Swapstream Platform

FT Alphaville reports: Swapstream, the electronic trading platform for interest rate swaps, is poised to launch a new system designed to target hedge fund customers. The UK-based company, which was bought by the Chicago Mercantile Exchange last year, currently has a platform for dealers only. It will add dollar and sterling swaps to its existing euro and Swiss franc offerings because hedge funds prefer a single platform on which they can execute broad trading strategies. The move highlights the growing influence of hedge fund traders in markets for all kinds of derivatives. It is also a sign that exchanges, such as CME, are making efforts to bring their trade processing and technological resources to bear on the huge global market for privately traded, or OTC, derivatives.

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The Wall Street Journal reports: MTS SpA, the dominant European bond-trading platform company, will discuss Friday contentious demands from hedge funds to be given direct access to its interdealer government-bond platforms for the first time.

You have to give it to MTS, they’re still looking into this despite a definitive “please don’t” from the EPDA and a cool reception (no doubt dealer influenced) to the idea from the Government issuers!

I first mentioned Project Fusion, dealing with Bank buyback of TradeWeb, in the below post a few weeks back. The implication being that it may be negative for LiquidityHub.

https://waratah.wordpress.com/2007/03/29/liquidityhub-whats-going-on/

It seems that Project Fusion is very much being driven by one Bank in particular and has tepid interest from many others given the complexity of getting something done. The end result is that LiquidityHub does remain the main game in town. Expect announcements soon…..

FX e-trading volumes doubled to $35 trillion in 2006 according to Greenwich. The jump was very much driven by the buyside (see below).

http://www.finextra.com/fullstory.asp?id=16777

A pointer to the future, certainly in terms of Swaps/CDS.

Article below noting an increase in the MarketAxess share price, 62.5% in 6-months! Speculation that Icap (see previous post) is a potential suitor.

http://www.efinancialnews.com/content/2447489877/18630/

The article notes MA’s limited bond universe & fairly steady trading volumes. However you can see an Icap or similar organisation looking to make it more than just a credit platform.