Tradeweb Markets says it has supported the first electronic indicative pre-trade credit check between a buy-side client and a futures commission merchant (FCM) for an over-the-counter derivatives transaction.
Using the electronic credit checking solution from Tradeweb, the customer successfully received an indication of available credit from JP Morgan as the clearing bank and executed a cleared interest rate swap trade, the firm says.
The new global regulatory environment for trading swaps will require a majority of financial institutions to begin clearing derivatives trades. Tradeweb says it is increasingly important that clients have efficient and cost-effective tools that give them real-time information about their ability to clear; especially for market participants preparing for the mandatory clearing deadline on June 10, 2013 under Dodd-Frank.
Integrated at the point of execution, the Tradeweb functionality enables customers to check for credit with their clearing banks using ping- or push-based protocols ahead of executing a swap transaction in an efficient and cost-effective way, minimising latency and ensuring information security and confidentiality.
“More clients are taking advantage of innovative technology to better inform their derivatives trading experience and execute more efficiently on Tradeweb every day,” says Lee Olesky, CEO of Tradeweb. “As the first marketplace to successfully demonstrate electronic pre-trade credit checking with an FCM for cleared swaps, we are helping our clients prepare to trade under impending derivatives regulation.”
Andres Choussy, global co-head of OTC clearing at JP Morgan, adds, “Tradeweb has taken an important step toward pre-execution certainty of clearing. [Its] ability to give an indication of available FCM credit lays the foundation for the ultimate goal: a legally binding credit commitment from both the FCM and the clearing house.”