Tradeweb, a fixed income and derivatives markets provider, has electronically traded and cleared an interest rate swap in the US from one of its clients for the first time.
The announcement comes as market participants and regulators in the US prepare for an overhaul of over-the-counter (OTC) derivatives trading as part of the Dodd-Frank Financial Reform and Consumer Protection Act brought in on the 21 July 2010. The bill plans to introduce exchange trading of OTC contracts on platforms called swap execution facilities (SEFs) and encourage central clearing and improved data collection of OTC derivatives trades.
The swap executed on Tradeweb was denominated in US dollars and traded between Deutsche Bank – which also acted as a clearing member – and a US-based asset manager. Chicago Mercantile Exchange Clearing cleared the trade.
According to Tradeweb, the transaction is the first that can be considered SEF-ready.
“This trade is an evolutionary step forward for the derivatives markets,” said Lee Olesky, CEO of Tradeweb. “As more clients adopt the central clearing model in anticipation of new regulatory requirements, we are happy to lead the way in providing what we anticipate will be a SEF-ready derivatives marketplace.””¨”¨
In addition to interest swaps, Tradeweb's trading platforms also support products including government bonds and mortgage backed securities. For trading European government bonds and interest rate swaps, the firm also offers Tradeweb PLUS, which gives investors access to attributed, live, executable prices from individual dealers.