SwapsWire has claimed record volumes in 2006. The electronic swap trading platform says that last year it confirmed more than one million trade events for the first time – more than double the number in 2005.
In order to handle increased volumes and a broadening product scope, the company intends to increase its headcount by 50% this year.
In addition to newly executed trades, a “trade event” includes unwinds, option exercises and other changes which occur to trades after they were originally put on the books.
SwapsWire says these “trade life cycle” changes require agreement between the parties to the original trade and are often the source of processing problems in manual operations.
An analysis of volumes shows 74% of trade events in 2006 were new deals, compared to 86% in 2005, highlighting the growing importance of life-cycle events to post-trade automation. It is very clear that clients are utilizing the additional support provided by SwapsWire for these life-cycle events
“We are delighted with the take-up of our services across the market,” says SwapsWire CEO Chip Carver. “Volumes on the buy-side increased by a factor of eight in 2006 and the momentum is continuing in 2007. Overall, our volume growth is being driven by both an increase in client numbers, and by existing clients using new products and features.”
SwapsWire also celebrated record volumes for equity derivative confirmations in January 2007, with a 30% increase over the previous monthly high. There was record activity in both share options and index options, reflecting the broad acceptance of the service. Volume in Japan has grown rapidly since the launch in July 2006, with this market now representing around 20% of overall equity derivative volume.
There are now 15 dealers and over 30 inter-dealer brokers live on SwapsWire for equity derivatives. Fund managers using SwapsWire for fixed income products today can automatically receive equity derivative trades for confirmation free of charge, says Carver.
“We believe there will continue to be an emphasis on equity derivatives and we expect to see increases in these volumes,” he adds. “The letter to the Federal Reserve Bank written last November by the senior management of 17 major dealers demonstrates that the market is committed to improving post trade processing. We know that SwapsWire users are seeing tangible benefits, with trade date confirmation now commonplace.”
More than 95% of the equity options booked on SwapsWire are confirmed within 30 minutes and this percentage rises to over 99.5% after three hours.