Traiana and MarketAxess SEF have completed the first live credit default swap (CDS) index trade using Traiana’s CreditLink service as the credit hub to verify pre-trade credit limits.
JP Morgan acted as the clearing member for the major buy-side participant on the trade.
Under the Commodity Futures Trading Commission’s (CFTC) swap execution facility (SEF) rules a clearing member must carry out pre-trade credit checks on trades prior to execution. CreditLink acts as a centralised hub and provides trading platforms, clearers/prime brokers, executing banks and buy-side firms the ability to monitor and manage pre- and post-trade credit in real-time across multiple trading venues in a consolidated view.
MarketAxess is the first trading platform to have been granted temporary registration as a SEF to be fully integrated and live with CreditLink, and the first platform on which a live trade was conducted with pre-trade credit checking via a credit hub.
Kevin McPherson, head of US sales at MarketAxess, says: “The completion of this trade with a major buy-side participant and JP Morgan, using Traiana as a credit hub, is an important milestone in the implementation of the new SEF rules. A seamless credit checking process is critical in helping participants maintain liquidity in the swap markets. We have been working hard with all of the participants on our platform and the industry as whole to ensure the necessary infrastructure is in place well ahead of the SEF trading mandate.”
Nick Solinger (pictured), head of product strategy and chief marketing officer, Traiana, says: “This trade represents the significant investment the entire industry has made into ensuring the transition to SEF trading is smooth for clients and we are delighted that the process has been so seamless with MarketAxess. JP Morgan and MarketAxess have been leaders in building the infrastructure for certainty of execution and we look forward to working with them across our mutual client bases.”
“Our clients require efficient and effective pre-trade credit checking processes,” says Andres Choussy, global co-head of OTC clearing for JP Morgan. “In volatile markets, you can’t afford to have your trade cancelled post execution, which is why we will continue working with Traiana, MarketAxess and the broader industry to ensure that each party to an electronic transaction has clearing commitments from their FCMs and the clearinghouses before their trade is executed.”