Off the Shelf SEF Platforms Emerge

Terry Flanagan

SEF-in-a-box concept caters to brokers, interdealer brokers and hedge funds.

Operators of swap trading platforms are repackaging them for sale to anyone else who wants to get in the business, which is expected to see a surge due to new regulatory requirements for executing and clearing OTC transactions.

Baymarkets, a developer and suppliers of specialist trading, risk and exchange software to the financial markets, announced today an “SEF in a box” which incorporates everything required to enable an electronic trading venue.

The new technology, which will be sold and marketed by the Cleartrade Exchange (CLTX), uses technology already powering the Cleartrade Exchange platform and includes all links, APIs, advanced tools for hedging and risk management, recaps/revals, position keeping and connectivity to settlement and clearing facilities.

Cleartrade Exchange and Baymarkets entered a strategic partnership in early 2009, whereby Cleartrade licensed the Baymarkets EDGE software.

“We have jointly developed the platform over the last two years, developing features which would not only serve the Cleartrade Exchange business but also provides features, functions and protocols which will meet the requirements necessary for the regulatory transformation,” Richard Baker,  CEO of Cleartrade Exchange, told Markets Media. “With the SEF in a box we are extending our relationship in that Cleartrade Exchange will offer this solution to clients in the market.”

The “SEF in a box” is available via cloud technology as a software-as-a-service and combines all the elements for an electronic trading platform in one package.

“The SEF in a box solution is intended for brokers, inter dealer broker firms and hedge funds,” said Baker. “Once deployed under their own brand they would onward deploy trading screens to their customers to create a private trading market.”

Cleartrade Exchange addresses the pre-trade, intra-trade and post trade requirements being implemented not only by U.S. regulators under the SEF rules but also those emerging in Europe under MiFid and EMIR.

“In 2011, we have seen the emergence of Mercari and Bloomberg Trading Platforms as just two examples of new SEF style execution venues,” Baker said. “We expect to see multiple SEFs appear over the next 2 years.”

The SEF-in-a-box will offer full client-branded front-end functionality, price discovery, trade execution, recaps, settlement, clearing and revaluations and enables clearing and settlement through the most appropriate route. The package has the necessary toolkit for complex combination spreads, asset chain trading recaps and data distribution.

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