Interest rate derivatives platform, Trad-X, added two German institutions to its dealer-to-client (D2C) electronic central limit order book (CLOB).
Commerzbank will provide liquidity on Trad-X D2C and stream two-way pricing to a range of smaller banks and buy side clients on Eurex cleared instruments, while Frankfurt-based DekaBank joined the platform as a non-dealer.
More than a dozen additional banks and financial institutions are currently going through the final testing and on-boarding process, and are expected to go live over the coming weeks and months, according to TradX. This includes tier 1 banks seeking to join as dealers, as well as non-dealers including small banks, hedge funds, asset managers and pension fund clients.
Trad-X D2C is a pure electronic MTF CLOB enabling dealers to provide liquidity for clients to execute on, as well as place live resting orders. The platform is designed to replicate many of the benefits offered to dealers trading via a CLOB model, while offering an alternative to RFQ execution. This includes real-time, executable pricing with live updates for a wide range of swap products, tighter bid/offer spreads and reduced information leakage.
Philippe Dudon, chief operating officer at Trad-X, comments: “Trad-X D2C was launched with a view to providing banks and financial institutions with an alternative to trading through RFQ protocols. A dealer-to-client central limit order book model is something we have not seen in the derivatives market until now. Commerzbank has been a key partner for Trad-X and is committed to providing liquidity on our Eurex-cleared D2C CLOB, while the addition of DekaBank illustrates the diversity of customers attracted by the type of alternative execution process we offer.”
Thomas Rösner, head of rates trading at Commerzbank, says: “The Trad-X D2C CLOB adds an extra dimension to our interest rate swap business and is another step forward for our expanding electronic offering. This is an excellent tool to provide liquidity to our clients across the marketplace.”
Phil Simons, global head fixed income sales – derivatives, funding & financing at Eurex, adds: “It’s very encouraging to see platform initiatives such as Trad-X D2C CLOB gain momentum, as they are essential components in establishing Eurex as the home of the Euro across listed and OTC derivatives. As well as enhancing execution options, this is consistent with our goal to help our members and clients reduce costs and increase efficiency through combining automated execution with integrated cross-product clearing and collateral management.”
According to a spokesperson, Trad-X D2C offers euro-denominated interest rate swap products, and has plans to increase and broaden its offering in due course. However, this will be driven by client demand, the spokesperson says.