Tradeweb Markets, a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, announced it has facilitated its first transactions on Swap Connect, China’s new electronic trading channel for CNY interest rate swaps (IRS), and it is currently the only international electronic trading platform that supports both request-for-quote (RFQ) and click-to-trade (CTT) execution protocols. Having previously collaborated with the China Foreign Exchange System (CFETS) to design and launch Northbound Bond Connect, CIBM Direct Link and Southbound Bond Connect, Tradeweb has teamed up again with CFETS to internationalise CNY IRS with the delivery of Swap Connect.

“Tradeweb’s role in connecting China’s financial markets with the rest of the world has achieved another significant milestone with the launch of Swap Connect,” said Enrico Bruni, Head of Europe and Asia Business at Tradeweb. “As global investors’ exposure to Chinese onshore bonds has grown in recent years, so has their need for effective tools that help them manage risk. Similar to its Bond Connect sibling, Swap Connect embodies the virtues of electronic trading in terms of efficiency, transparency and liquidity.”

“The launch of Swap Connect is a new step towards the opening up of China’s bond market to the rest of world, and we are very pleased to collaborate with Tradeweb again to jointly support overseas investors’ participation in the domestic financial derivatives market through Northbound Swap Connect in a convenient and efficient manner,” said Zhang Yi, President of CFETS. “CFETS will continue to optimize various mechanisms to provide efficient and convenient financial infrastructure services for international investors to participate more deeply in China’s financial market and meet their diversified trading requirements.”

In its initial phase, the Swap Connect programme will connect offshore investors with mainland China’s interbank CNY IRS market through a Northbound route. Once onboarded with Tradeweb for Swap Connect trading, clients can place orders using the RFQ or CTT electronic execution protocols, and can clear trades through HKEX OTC Clear (OTCC) under Hong Kong’s internationally familiar legal framework.

“Direct electronic trading access to Swap Connect on Tradeweb allows us to benefit from improved liquidity and executable size in the onshore CNY IRS market. The availability of allocations, pre-trade data and electronic record keeping helps us prove best execution and enhances operational efficiency. We are proud to be one of the first investors to trade through Swap Connect,” said Shawn Yuan, Co- Chief Investment Officer of the Dymon Asia Multi-Strategy Investment Fund and Chief Investment Officer of the Dymon Asia China Absolute Return Bond Fund at Dymon Asia Capital, a leading alternative investment management firm in Asia.

“We are pleased to announce that Standard Chartered has been an active participant on Swap Connect, both as a market maker in mainland China and as an investor in Hong Kong,” said Charles Feng, Head of Macro Trading, Greater China & North Asia at Standard Chartered. “Swap Connect, tapping the deep and liquid interest rate swap market in mainland China, will provide international investors in the RMB bond market new and critical risk management tools. This virtuous cycle, cash bonds and the hedging tools, formed between Bond Connect and Swap Connect will likely encourage continued strong interest in the opening of the China bond and derivatives markets to international investors for years to come.”

Tradeweb is a leading global IRS trading platform, bringing greater transparency to the marketplace since 2005, helping to reduce risk and create more competitive and efficient markets. Its first Asia local currency IRS products, Yen IRS, went live in 2008. In 2014, Tradeweb hosted the first electronic JSCC-cleared yen swap transaction by a Japanese bank, followed by the first regulated Yen swap trade on its Electronic Trading Platform (ETP) a year later. Numerous IRS market firsts were executed on Tradeweb – the first electronic swap compression trade, electronic swaptions trading, electronic cleared inflation swap and multi-asset package trades – helping to move the derivatives industry forward.

Source: Tradeweb