JP Morgan executes first electronic total return swap on Tradeweb SEF

The trade with JP Morgan was the first fully electronic standardised total return swap based on IHS Markit’s iBoxx UDS liquid high grade index at Tradeweb. 

Investment bank JP Morgan has acted as a counterparty to the first electronic standardised total return swap on trading platform provider Tradeweb.

The swap transaction was based on IHS Markit’s iBoxx US liquid high grade index and executed on Tradeweb’s swap execution facility (SEF).

Total return swaps allow corporate bond traders and portfolio managers to add risk or hedge exposure. When exposed to an index over a set period, clients pay a counterparty a financing rate, which makes the products a capital-efficient tool for adding risk or hedging, Tradeweb said.

 “Total return swaps have been an efficient tool for investors’ credit hedging and value-seeking purposes for many years, and the electronification of this market should broaden the product to a wider user base,” said Will Haber, head of North America macro credit trading at JP Morgan.

“The iBoxx TRS product set offers compelling advantages for investors and we expect adoption and volume growth to increase following this first electronic trade.” 

Tradeweb’s trading volume in global cash credit has more than quadrupled over the past four years, handling more than 19% of US high grade TRACE volume and more than 7% of US high yield TRACE volume each day in February. 

“With the addition of total return swap trading, we have rounded out a comprehensive suite of directional products including CDS, ETF and portfolio trading that allow our institutional clients to express a macro credit view,” said Chris Bruner, head of US institutional fixed income at Tradeweb.

“We already operate one of the most complete credit trading platforms in the global fixed income market, and are excited to collaborate with our customers to expand optionality and liquidity once again.”

This is the second first for Tradeweb recently, after US investment bank Goldman Sachs traded the first interest rate swap in Indian Rupees earlier this month. The new product launch was part of Tradeweb’s efforts to expand its emerging markets offering.

«