MTS Swaps to bring electronic-trading of interest rate swaps to buy-side06.14.2013 By Terry Flanagan
- A number of banks sign MoU to support platform
- Provides platform for buy-side to trade interest rate swaps
- Will enhance transparency and efficiency in European interest rate swaps
- MTS Swaps will support full trade lifecycle
- FCA regulated market
MTS, Europe’s premier fixed income trading venue, is set to launch MTS Swaps, a new platform that will give buy-side institutions the ability to trade interest rate swaps electronically. The venture, which is expected to go live in Q4 2013, will use innovative technology to increase customer choice and will enhance transparency and efficiency in European interest rate swaps.
Drawing upon existing MTS distribution, technology and market expertise, the platform will enable buy-side participants to trade interest rate swaps with a diverse range of liquidity providers via a prime bank. This provides them with access to the best prices available in the market while allowing them to maintain and strengthen their existing trading relationships.
A number of banks including BNP Paribas; Commerzbank AG, Crédit Agricole Corporate and Investment Bank; HSBC; Lloyds Bank Commercial Banking; Societe Generale Corporate and Investment Banking; and UBS AG have signed MoUs indicating their intention to support the platform from launch. MTS Swaps will support the full trade lifecycle from pre-trade price discovery and execution to post-trade reporting and connectivity to clearing. The platform will support interest rate swap trading via request for competitive quote (RFCQ) and executable prices.
MTS Swaps will be an FCA regulated market managed by EuroMTS Limited.
Jack Jeffery, CEO of MTS, comments: “While electronic trading and central counterparty clearing are transforming the wider OTC derivatives landscape, our aim is to evolve trading in fixed income swaps in-line with these developments through the combination of innovative, appropriate technology and our proven expertise in operating electronic markets. Launching trading for interest rate swaps is the start of this evolution, enabling us to build a community of banks and buy-side institutions that will benefit from the further exciting developments.”
Akikur Rahman, Vice President, eRates Product Manager, Commerzbank AG, comments: “The balance between stability and innovation is a crucial consideration when developing the technology to facilitate trading in today’s changing fixed income markets. MTS has a proven track record in this space, and this new platform looks set to become a significant part of the swaps market infrastructure.”
Thomas Spitz, Global Head of Credit and Rates, at Crédit Agricole Corporate and Investment Bank commented: “Regulatory change is having a major impact on the Interest Rate Derivatives market and accelerating the trend towards electronic execution. At Crédit Agricole CIB we are always looking for ways to service our clients better and this includes helping them navigate the impact of these changes. Built around clearing and transparency of pricing, MTS Swaps is specifically designed to take account of these regulatory challenges and to capitalise on the opportunities they present. Through our partnership with MTS, we are delighted to be contributing to the evolution of a trading venue that will provide significant benefits to our clients.”
Pasquale Cataldi, Managing Director, Head of European Rates at HSBC, comments: “With the industry widely expecting to be required to trade certain clearing-eligible swaps on multilateral regulated platforms, MTS Swaps will enable us to continue to improve transparency ahead of any regulatory announcements and significantly enhance the level of service we offer our clients in the fixed income space.”
Rob Hale, Managing Director, Head of GBP Swaps, Rates Trading at Lloyds Bank Commercial Banking, comments: “As the regulatory environment for derivatives continues to evolve, forward-thinking banks are making provisions for the upcoming changes and adapting their business models. MTS Swaps will enable us to enhance customer loyalty and facilitate increased levels of electronic trading with buy-side clients.”
Amaury D’Orsay, Global Head of Rates Trading at Societe Generale Corporate and Investment Banking, comments: “Optimising customer service in the fixed income space has become a key focus in recent years, as clients look for differentiating factors in an increasingly cost-sensitive environment. MTS Swaps will allow us to open up a whole new electronic market to our clients.”
Paul Hamil, Managing
Director Fixed Income Trading at UBS, comments: “Regulation continues to push the fixed income markets towards more centralised, transparent, electronic market models. MTS Swaps will provide its participants with access to liquidity, certainty of execution and full STP to clearing, ensuring that they can continue to trade as the regulatory landscape evolves.”
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MTS is Europe’s premier facilitator for the electronic fixed income trading market, with over 500 unique counterparties and average daily volumes exceeding EUR 85 billion. MTS customers benefit from its relationship with Europe’s leading diversified exchange business, London Stock Exchange Group, which operates the largest and most liquid equity marketplace in Europe.
MTS markets provide the professional trading environment for the interdealer marketplace, enabling primary dealers from across the globe to access unparalleled liquidity, transparency and coverage.
The MTS Repo platform delivers an order driven market for the electronic transaction of repo agreements and buy/sellbacks. ACM is an electronic auction-trading platform that uses the MTS Repo technology to enable cash-rich investors to enter into secured money market investments via the tri-party repo mechanism.
MTS further facilitates the dealer-to-client bond market through BondVision, the most trusted and efficient electronic bond trading market, delivering exceptional access for institutional investors direct to the market makers, while MTS Credit delivers an electronic market for a wide range of multi-currency non-government bonds.
MTS Data is sourced directly and exclusively from the MTS interdealer market and includes benchmark real-time data, reference data, reference prices, time series data and snap-shot data, providing the benchmark data source on the fixed income market.
MTS Indices provide the first independent, transparent, real-time and tradable eurozone fixed income indices, based on tradable prices from MTS. MTS indices are tracked by (and can be traded via) 30 ETFs in addition to numerous structured products.
About London Stock Exchange Group:
London Stock Exchange Group (LSE.L) is a diversified international exchange Group that sits at the heart of the world’s financial community. The Group can trace its history back to 1801.
The Group operates a broad range of international equity, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS, Europe’s leading fixed income market; and the Pan-European equities and derivatives platform, Turquoise. Through its markets, the Group offers international business, and investors, unrivalled access to Europe’s capital markets.
Post trade and risk management services are a significant and growing part of the Group’s business operations. LSEG operates CC&G, the Rome headquartered CCP and Monte Titoli, the significant European settlement business, selected as a first wave T2S participant. The Group is also a majority owner of leading multi-asset global CCP, LCH.Clearnet.
The Group offers its customers an extensive range of real-time and reference data products, including Sedol, Unavista, Proquote and RNS, as well as access to over 200,000 international equity, bond and alternative asset class indices, through LSEG’s world leading index provider, FTSE.
London Stock Exchange Group is also a leading developer of high performance trading platforms and capital markets software. In addition to the Group’s own markets, over 30 other organisations and exchanges around the world use the Group’s MillenniumIT trading, surveillance and post trade technology.
Headquartered in London, United Kingdom with significant operations in Italy, France, North America and Sri Lanka, the Group employs approximately 2,800 people.
Further information on London Stock Exchange Group can be found at: www.lseg.com