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MarketAxess launches electronic credit default swap trading system

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MarketAxess Holdings has launched a client to multi-dealer electronic credit default swap (CDS) index trading system in London and New York.

The new system has been

MarketAxess Holdings has launched a client to multi-dealer electronic credit default swap (CDS) index trading system in London and New York.

The new system has been developed with the assistance of eleven global dealers — ABN AMRO, Banc of America Securities, Bear Stearns, BNP Paribas, Dresdner Kleinwort Wasserstein, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch, The Royal Bank of Scotland and UBS — who have provided extensive feedback on the specifications for the new trading platform.

Eight of these dealers have completed their systems integration with MarketAxess and will be live on launch day, with the remaining three dealers and others expected to be live within weeks. CDS index trading will be offered in conjunction with cash trading on MarketAxess’ US and European high-grade corporate and emerging markets bond platform.

"Our CDS index trading solution, developed in conjunction with leaders in the industry, is another example of MarketAxess providing superior technology solutions for clients, while at the same time meeting the critical industry need to decrease the number of unconfirmed trades outstanding,” said Richard M. McVey, Chairman and Chief Executive Officer of MarketAxess. “From pre-trade to post-trade, our solution is designed to eliminate trade errors and discrepancies through a robust trade verification and auto-matching and confirmation process.

"In conjunction with our CDS launch, we are pleased to announce that Andy Brindle, most recently Global Head of Credit Derivatives at JPMorgan Chase, has joined MarketAxess as a Senior Advisor for the credit derivatives business. Andy’s extensive global market knowledge and experience with dealers, clients and market participants will be an asset to the Company as we continue to build out our CDS index trading solution and move into single names in 2006," added McVey.

Industry leaders with whom MarketAxess worked in developing the new trading system include The Depository Trust & Clearing Corporation’s wholly owned subsidiary, Deriv/SERV, a full-service provider of automated trade processing solutions in the OTC derivatives market. MarketAxess has integrated its front-end CDS index trading system with Deriv/SERV, allowing it to offer an end-to-end electronic trading solution designed to eliminate trade discrepancies and expedite the confirmation process.

MarketAxess also recently announced its subscription to Markit Group Limited’s RED service, the industry standard for reference entity and reference obligation identifiers in the credit derivatives market. The Markit RED data will help MarketAxess achieve straight through processing from pre-trade to confirmation.

"We are extremely pleased with the broad participation of our dealer partners in launching our new CDS index trading system,” said Barry Goldenberg, Credit Derivatives Product Manager at MarketAxess. “The high level of dealer participation is a clear validation of our approach to developing our CDS trading solution, characterized by a focus on incorporating and integrating industry protocols and initiatives to improve the trading process, rather than creating alternative solutions that undermine industry efforts.”

Thomas Benison, vice president and head of credit product management for North America at JPMorgan, added: "Working with DTCC and Markit, MarketAxess has demonstrated its commitment to building a high-end electronic CDS solution for clients, dealers and the industry. MarketAxess is well positioned to combine its cash credit trading with a ‘straight through processing’ CDS trading platform, helping to promote efficiency and reduce lags in confirmations. We are very pleased to be participating on the platform."

Background notes: MarketAxess’ multi-dealer trading platform allows institutional investor clients to simultaneously request competitive, executable bids or offers from multiple broker-dealers, and to execute trades with the broker-dealer of their choice. MarketAxess offers the ability to trade US high-grade corporate bonds, European high-grade corporate bonds, agencies, high yield and emerging markets bonds. MarketAxess also provides data and analytical tools that help clients make trading decisions, and it facilitates the trading process by electronically communicating order information between trading counterparties.

MarketAxess’ current participating dealers are: ABN AMRO, Banc of America Securities, Barclays PLC, Bear Stearns, BNP Paribas, Citigroup Global Markets, Credit Suisse First Boston, Deutsche Bank Securities, DZ Bank, FTN Financial, Goldman Sachs, HSBC, ING Financial Markets, JPMorgan, Jefferies & Company, Lehman Brothers, Merrill Lynch, Morgan Stanley, The Royal Bank of Scotland, Santander Investment Securities, SG Corporate & Investment Banking, UBS and Wachovia Securities.

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