Tradeweb Markets has completed a fully electronic request-for-market (RFM) swaption package trade, a first in the industry.
Specifically, institutional clients on Tradeweb’s Swap Execution Facility (SEF) can now request and receive a two-way market (as opposed to a price based on one direction) for a series of swaps and swaptions in one single electronic quote.
Troy Dixon
MD, co-head of global markets at Tradeweb, said: “This trade signals the expansion of Tradeweb’s electronic trading capabilities into a previously untapped area of the rates market […] this is a significant step forward in the evolution of bilateral derivatives trading and the broader electronification of the swaption and broader derivatives markets.”
This latest development is able to protect client intent and exclusively share potentially sensitive and valuable trading information between counterparties.
Swaption’s give participants the choice to enter into an interest rate swap in the future at a pre-determined rate – thus allowing traders to take nuanced views on future interest rate movements as well as market volatility, explained Tradeweb.
In addition, RFM is particularly beneficial to traders’ processes in times of volatility, allowing for maintained control of trading intent as well as benefiting from transparency, customisation and flexibility.
The counterparties on the first trade executed on SEF were Citadel and Barclays. Since, 20 dealers are now providing RFM swaption package pricing.
John Niccolai, chief operating officer for global fixed income at Citadel, affirmed: “Electronically trading swaptions is an important first step in the evolution of electronically trading OTC rates options, which will increase transparency, improve execution workflow, reduce counterparty risk and strengthen liquidity, making this an easier product to access and trade.”