STP


It has been some time since I’d seen Autobahn (the stand alone version, not what runs via Bloomberg or Reuters or whatever) in action. And I’ve not really ever had a good look at what they offer in IRS.

Well I can say I’m quite impressed. It is a single-dealer platform sure, but it really is the best thing out there in terms of functionality for the e-Swaps market place (sorry to tell you SwapsStream) and, along with BARX, product coverage. I’m talking Outright, Curve Spreads, Butterflies, 18 currencies, RFQ, Streaming Click and Trade, Limit Orders. And the best of all? Unwinds. You find the deal (whether dealt on the phone or electronically) you wish to unwind and open a ticket to unwind the swap there and then. Add in trading API, STP and even the simplicity of e-mail confirmations.

Being single-dealer, albeit one of Waratah’s Tier-1 FI e-Trading dealers, is a massive problem. Multi-dealer is undoubtedly what clients such as Hedge Funds and Tier-1 Funds want. But Deutsche Bank are hardly going to invite their competitors onboard, are they? 🙂

So what to do? Do the likes of LiquidityHub and TradeWeb (sorry to leave you out SwapsStream) simply copy the functionality? No trade mark on what Autobahn does, it simply replicates phone trading in a more efficient manner…the whole point of e-Trading.

Indeed TradeWeb does offer curve trades and butterflies. But it remains a Request For Quote driven government bond platform running on architecture from the late 90’s/early noughties. Although I hear they’re looking to jump on the Request For Stream (RFS) bandwagon after Fusion went ahead late last year.

LiquidityHub appears to want all functionality to fit into the RFS model, which counts out the vast majority of it’s Price Makers from being able to do broken dates, unwinds and also butterflies etc.

Time will tell, but certainly a multi-dealer platform that offers Autobahn-like functionality and products would go down well.

Well, not quite, but after acquiring IIC last month, they’re now going to buy SwapsWire.

Press release here from TW.

At the risk of being accused of beating up TW this week…………..why the hell has it taken so long to do this?

News of Morgan Stanley using Fidessa LatentZero as a point-to-point for common clients. At this stage it appears it is for cash equities futures and Swaps.

One can only guess they’ll add more products, and banks, in due course.

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”?

Given the markets, this story about Fidessa and LatentZero integrating their respective EMS seems a bit boring…..and it is!

For the sake of completeness…….click on the link.

The following story discusses the lack of operational automation at European Private Banks, across all asset classes.

http://www.finextra.com/fullstory.asp?id=16642

From a Fixed Income perspective this is quite amazing. The amount of small tickets these guys write means there would be massive potential for long-term savings in processing costs – perhaps the margins they charge clients makes this irrelevant?

Needless to say their counterparties would welcome fewer failed small trades, the vast majority being on corporate bonds.

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