Tradition Brokers’ interest rate derivatives platform Trad-X has launched what it claims is the industry’s first dealer-to-client (D2C) pure electronic central limit order book (CLOB) and completed a number of live transactions between dealers and non-dealers.
The firm says that Aegon Asset Management became the first buy-side institution to execute a euro IRS trade on the CLOB, with BNP Paribas as the counterparty, and the transaction was cleared by Eurex Clearing. “The completion of our first trades between dealer and non-dealer counterparties validates our model, proving it to be a credible alternative to RFQ protocols,” says Dan Marcus, CEO of Trad-X. “We expect this to be particularly beneficial for non-dealers trading standardised interest rate swap products, as it enables access to pricing for a wide range of trading instruments from multiple dealers in a very cost effective manner.”
The Trad-X CLOB is registered as an MTF and offers what the firm calls impartial access with dealers (qualified under a fair and objective criteria) providing liquidity for clients that can execute on that liquidity, as well as place live resting orders.
Tradition says the platform is designed to replicate many of the benefits offered to dealers trading via a CLOB model, including real-time, executable pricing with live updates for a wide range of swap products, tighter spreads and reduced information leakage.
“Trad-X’s central order book for non-dealers lowers barriers to market entry and we are pleased to be the first institution to complete a trade with a dealer on the platform,” says Derek Milner, senior portfolio manager at Aegon Asset Management. “This is a genuine step forward in terms of innovation. We hope this gains traction across the market and increases the quality of pricing and efficiency of execution for all market participants. We believe the main advantages of this platform are certainty of execution, anonymity and access to offsetting non-dealers’ exposures.”
Francois Puget, head of G10 rates trading Europe at BNP Paribas, adds, “We are delighted to be the first dealer to execute a transaction on Trad-X D2C CLOB which underpins our commitment to provide the best comprehensive offer to fit our clients’ needs.”
Meanwhile, Danny Chart, head of fixed income business development at Eurex Clearing, says, “We very much welcome the first trades which were executed on Trad-X D2C central limit order book and cleared at Eurex Clearing. This innovative platform provides our buy-side clients with access to a viable alternative liquidity pool – further increasing execution protocol options, distribution of price discovery and depth of market – as well as facilitating our development of an EU-based alternative for Euro Clearing at Eurex.”