Currently the trading of single-name CDS via electronic means is minimal. This is for a number of reasons, such as Bank support and, still, issues of standardisation.

The CDX and iTraxx Indices are clearly more liquid and do trade in small volume over the likes of TradeWeb, MarketAxess and, of course, as a futures contract on Eurex.

What about lists of single-name CDS? Essentially these are traded by Hedge Funds and Correlation Desks on the back of synthetic CDO issuance. There is a huge amount of benefit to be gained by trading these electronically, in terms of efficient pricing and especially post-trade processing of hundred’s of names.

Q-wixx (part of Creditex) and MarketAxess offer this CDS list tool, however has the current credit market – where CDO’s have been fairly and squarely blamed – killed this type of trading for the foreseeable future? Certainly one can’t see too many new CDO’s (or similar securitised debt), synthetic or otherwise, coming out for a while.

For MarketAxess this isn’t a huge deal as they are and plan to remain cash bond focused, but what about Q-wixx? From what I’ve heard and seen it was a clever tool but limited in that it concentrated on one type of trade in credit derivatives only.

With a parent significantly less cash rich than Goldman Sachs, could it be another victim of the credit “crisis”?

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