Start-up swap execution facility (Sef) trueEX has become one of the most used electronic platforms for interest rate derivatives in the US, marking a significant shift in the swaps trading landscape.
According to data compiled by Tabb Group, trueEX has seen its market share grow exponentially over the past two years.
Despite only capturing less than 1% of total Sef volumes in vanilla swaps in mid-2014, for the first half of 2017 it recorded the second highest volumes across all platforms.
In March alone, trueEX reported $3.3 trillion in notional volume of interest rate derivatives, the most out of any Sef platform including rivals Bloomberg and Tradeweb – two major market players.
Being the last remaining start-up Sef, trueEX has managed to attract a wider range of swaps dealers and buy-side clients to its platform due a core offering of non-standardised products and trade compression, despite facing stiff competition from the incumbent dealer-to-client (D2C) platforms.
“To date, we have been significantly handicapped and disadvantaged in trying to bring to market products and services we think are superior to what is offered by the incumbent Sefs,” Sunil Hirani, CEO of trueEX told the TRADE Derivatives. “Although many of these obstacles remain in our path, we are greatly encouraged by recent favourable events.”
Hirani said despite low volumes over the past two years, interest has built up as more dealers are onboarding onto the platform. It now has nearly 90 buy-side clients, and 13 clearing banks including Bank of America Merrill Lynch, Citigroup, Goldman Sachs and JP Morgan.
“It is becoming easier and easier for buy-side firms to give us the same shot as the incumbent platforms,” Hirani added. “Today we have more dealers going live with us; more products and jurisdictions being covered; and more cleared, non-cleared swaps and swaptions on our platform. The result is that we will continue to have months like we have seen this year with more buy-side firms coming on board and utilising us for more currencies and products.”
Most recently trueEX hired Chris Yoshida, a former head of rates sales at Deutsche Bank and Morgan Stanley, to run sales, marketing and strategy and to capitalise on its rapid to growth as it gears up for expansion into Europe and potentially Asia.
By carving itself a sizeable share of swaps trading through niche non-standardised and standard derivatives, Hirani is aiming to offer clients every interest rate product under the sun to trade.
“Moving forward, we are going to expand into a broader range of products within the rates space to enhance the client and bank experience. With our expanded rates strategy, our platform will have greater coverage of rates offerings priced, executed and processed electronically – that is a win for all market participants.”