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Bloomberg launches standardised Total Return Swaps on Bloomberg Barclays Indices

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Bloomberg has launched standardised Total Return Swap contracts on the Bloomberg Barclays Indices, providing predefined synthetic exposure to cash bonds for the most widely-used fixed income benchmarks.

As investors seek more cost-efficient methods of trading in less-liquid credit markets, Bloomberg TRS (BTRS) offers exposure to the Bloomberg Barclays US Corporate Investment Grade and US High Yield Indices at minimal capital expense.
“The introduction of Bloomberg TRS will help drive down costs and risks for a broader set of market participants,” says Bloomberg's global credit and TRS business manager Paul Kaplan. "As margin, risk and post-trade capital requirements have reduced the amount of risk and large bond positions that financial institutions can carry, our standardised total return swaps enable buy-side and sell-side clients to maintain effective trading strategies.”
Full constituent data and analytics are now available through the Bloomberg Terminal to all Bloomberg Anywhere subscribers. Price discovery will be enhanced with streaming levels from multiple market makers.
Investors are able to enter and exit trades with minimum negotiations.
Buying swaps as synthetic exposure to indices incurs a lower risk of divergence between the price behaviour of a position and the price behavior of a benchmark.
Standardised TRS and other OTC products provide alternative positions to holding cash.
A standardised model and interoperability with Bloomberg’s other fixed income analytics supports the introduction of additional benchmarks.
“Total return swaps have gained popularity amongst institutional investors in recent years,” says Kevin McPartland (pictured), managing director, market structure and technology at Greenwich Associates. “Many dealers have followed suit, putting forth total return swaps as another key tool for clients in their credit product arsenal.”
“Over the past 12 years trading the product, I have seen regular interest from clients to have independent governance and contract standardisation for indices," says Jonathan Blender, head of fixed income index trading at Deutsche Bank.

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