Trad-X, a Compagnie Financière Tradition owned brand and product used for the global interest rate swap (IRS) market, has been re-positioned with a new central limit order book (CLOB) and auction market for Eurex’s OTC cleared Interest Rate Swaps (IRS), in a newly launched clearing partnership.
The company announced the launch today to coincide with EMIR frontloading requirements, and the CLOB will initially aim towards liquid euro medium- to long term swaps (2yr- 30yr), and related spreads and flys, as well as asset swaps.
A number of further initiatives are aiming to bolster the company’s value offering, including how public it will provide auctions with the aim of liquid and transparent central counter-party clearing (CCP) between Eurex Clearing and LCH.Clearnet, by enabling participants to move positions from one CCP to another (while optimizing margin) known as a switch service.
We believe the establishment of a transparent CLOB gives our customers greater choice and helps provide a fair and competitive environment.
The launch of the switch service was compared to the Tradition SEF which the company had successfully registered with the CFTC – the services of which account for the majority of all CCP basis volume, and which forms a large part of Trad-X IRS CLOB Liquidity , according to the company’s press release.
Central limit order book, switch service, and public pricing page
Philip Simons, Global Head of Fixed Income Trading and Clearing Sales at Eurex, said in the company statement: "We see strong demand from clients wanting to realise the benefits of switching positions and moving risk seamlessly between CCPs to efficiently manage and optimise their capital and margin. Trad-X's excellent track record as the leading electronic IRS CLOB globally makes them a natural partner for this initiative."
A new public reference page will be published by Trad-X for EurexOTC cleared swap mid-markets, and will be available under Bloomberg ticker TREU.
Some of the key highlights of the Trad-X CLOB is how it receives continuous two-way streaming from a wide range of market participants - including 15 of the largest global market participants in the world.
The announcement cited average daily volume of EurexOTC Clear increasing more than 60% so far in 2016, and with further increases expected ahead of mandatory clearing phases.
Also commenting in the official press release, Dan Marcus Trad-X CEO said: "As an MTF we support fair and open access to all participants including market infrastructure providers such as Eurex Clearing. We believe the establishment of a transparent CLOB gives our customers greater choice and helps provide a fair and competitive environment."
