TradeWeb launches global online market for credit derivatives
Thomson TradeWeb, has launched CDS, its Credit Default Swap Indices multi-dealer-to-customer online marketplace for DJ CDX and iTraxx trading.
TradeWeb CDS offers institutional investors the ability to simultaneously request quotes electronically from multiple dealers, and move seamlessly through the whole trade cycle, from trade execution to confirmation. This is enabled by TradeWeb's award-winning Straight-Through Processing (STP) network, TradeXpress.
Additionally, the risk inherent in prolonged negotiation and settlement is eliminated by TradeWeb's SWAPtracker, which enables users to execute and track trades in real-time without cumbersome paperwork. SWAPtracker shows users and traders their trade details simultaneously, and rapidly identifies and rectifies any potential discrepancies.
TradeWeb's CDS is the only electronic trading platform that provides functionality that enables dealers and customers to adhere to the International Swaps & Derivatives Association (ISDA) 2005 Novation Protocol. Through TradeWeb's SWAPtracker, users can process assignments and unwind trades in real-time.
Launched in September, ISDA's 2005 Novation Protocol establishes standardized procedures to streamline OTC trade processing and eliminate some of the market's risk.
"The launch of TradeWeb's new CDS platform comes at a particularly important time for the industry as it seeks to streamline its trading and back-end processing for CDS transactions," says Michael Pohly, Managing Director Corporate Credit Markets at Morgan Stanley.
Doug Warren, U.S. Head of Credit Derivative Trading at Barclays, adds: "TradeWeb's trading platform is a big step toward the creation of a market standard for efficient transaction processing of credit derivatives. We expect this to be a positive development for dealers and clients alike."
As a further enhancement to TradeWeb's award winning STP platform, the company has partnered with The Depository Trust & Clearing Corporation (DTCC), to provide a direct link to its Deriv/SERV service, which enables TradeWeb CDS users to confirm trades seamlessly, view trade confirmation status and validate open net CDS positions. No other electronic trading platform has achieved this level of integration.
"TradeWeb's direct link to DTCC Deriv/SERV will greatly improve the speed, accuracy, and cost efficiency of credit default swaps trade processing for dealers and their customers by providing a seamless flow from trade execution through to legal confirmation and subsequent cash flow settlement," says Peter Axilrod, Managing Director at DTCC.
Support of TradeWeb's online CDS marketplace continues to grow with five additional dealers agreeing to provide liquidity. Joining the founding dealers, JPMorgan, Morgan Stanley, and Goldman Sachs are Merrill Lynch, UBS, Barclays, ABN AMRO and Dresdner Kleinwort Wasserstein. These dealers will provide liquidity across a range of DJ CDX and iTraxx index products. The dealer group members are also directly linked to DTCC's Deriv/SERV for real-time trade processing. Additional dealers are now actively integrating TradeWeb CDS into their trading and transaction processing workflow.
"Our partnerships with these major CDS dealers and key industry services create tremendous value for the rapidly growing CDS market," says Jim Toffey, ChiefExecutive Officer of Thomson TradeWeb. "We expect electronic trading and trade processing to significantly improve price transparency and process efficiency, while lowering operational risk and cost."
Lee Olesky, President of Thomson TradeWeb, adds: "With regulators and market participants encouraging a higher level of automation in the CDS Index market, TradeWeb, together with eight premier CDS dealers are at the forefront of innovation in driving greater efficiency into this market."
For the analysis, execution and processing of CDS trades, TradeWeb also has partnered with Markit Group to provide users with Markit RED index identifiers, which are integrated through the entire electronic trade cycle. "The need for efficiency in the fast-growing credit markets heightens the value added by standardization."says Penny Davenport, Director at Markit Group."TradeWeb's partnership with Markit RED and DTCC on their CDS execution platform helps to accomplish this goal."
Background notes: TradeWeb is the leading online fixed-income trading network with over 8 million trades executed and total volume surpassing USD 95 trillion since its inception in 1998. TradeWeb's multi-dealer auction model links the trading desks of 36 of the world's leading fixed-income dealers with more than 2,000 buy-side institutions in North America, Europe and Asia.
The business is also the leading electronic "straight-through processing" network for the fixed-income markets, providing dealers and buy-side institutions with paperless trade allocations and confirmations on its fully integrated TradeXpress network. TradeWeb's STP network also includes AccountNet, the leading standard settlement instructions database and derivatives counterparty management tool.
For more information on credit derivatives, please click here
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