Trad-X, a Compagnie Financière Tradition owned brand and product used for the global interest rate swap (IRS) market, has been re-positioned with a new central limit order book (CLOB) and auction market for Eurex’s OTC cleared Interest Rate Swaps (IRS), in a newly launched clearing partnership.
The company announced the launch today to coincide with EMIR frontloading requirements, and the CLOB will initially aim towards liquid euro medium- to long term swaps (2yr- 30yr), and related spreads and flys, as well as asset swaps.
A number of further initiatives are aiming to bolster the company’s value offering, including how public it will provide auctions with the aim of liquid and transparent central counter-party clearing (CCP) between Eurex Clearing and LCH.Clearnet, by enabling participants to move positions from one CCP to another (while optimizing margin) known as a switch service.
We believe the establishment of a transparent CLOB gives our customers greater choice and helps provide a fair and competitive environment.
The launch of the switch service was compared to the Tradition SEF which the company had successfully registered with the CFTC – the services of which account for the majority of all CCP basis volume, and which forms a large part of Trad-X IRS CLOB liquidity, according to the company’s press release.
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Central limit order book, switch service, and public pricing page
Philip Simons, Global Head of Fixed Income Trading and Clearing Sales at Eurex, said in the company statement: “We see strong demand from clients wanting to realise the benefits of switching positions and moving risk seamlessly between CCPs to efficiently manage and optimise their capital and margin. Trad-X’s excellent track record as the leading electronic IRS CLOB globally makes them a natural partner for this initiative.”
A new public reference page will be published by Trad-X for EurexOTC cleared swap mid-markets, and will be available under Bloomberg ticker TREU.
Some of the key highlights of the Trad-X CLOB is how it receives continuous two-way streaming from a wide range of market participants – including 15 of the largest global market participants in the world.
The announcement cited average daily volume of EurexOTC Clear increasing more than 60% so far in 2016, and with further increases expected ahead of mandatory clearing phases.
Also commenting in the official press release, Dan Marcus Trad-X CEO said: “As an MTF we support fair and open access to all participants including market infrastructure providers such as Eurex Clearing. We believe the establishment of a transparent CLOB gives our customers greater choice and helps provide a fair and competitive environment.”