Traiana has today announced that its pre-trade clearing certainty initiative has received the support of a series of futures commissions merchants (FCMs) and trading venues.
The trade processing solution provider has garnered the support of Barclays, BofA Merrill Lynch, Citi, Goldman Sachs, J.P. Morgan, representing leading buy-side institutions putting their support behind the central risk management infrastructure to be the first clearing firms to use Traiana’s CreditLink service to manage swap clearing limits, with deployments underway to meet regulatory deadlines.
Large-Scale SEF Support
The service is in live production operation and is connected to and supported by twelve potential swap execution facilities (SEFs) and designated contract markets (DCMs), including GFI Group, iSwap, Javelin, MarketAxess, TeraExchange and trueEX, and has been built in consultation with major clearinghouses, including CME Group, IntercontinentalExchange and LCH.Clearnet Group.
Venues Manage Clearing in Real-Time
MarketAxess was the first trading venue to complete production certification for order screening with CreditLink. J.P. Morgan was the first to complete production certification as an FCM.
Delivered using Traiana’s CreditLink service, it offers clearing firms and buy-side firms the ability to manage trading and clearing limits in real-time for interest rate, credit and foreign exchange (FX) swaps.
Firms will be able to pre-screen orders to trade swaps prior to execution in low latency, providing greater certainty of clearing acceptance at the time of execution.
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Designed to maximize access to liquidity and reduce limit fragmentation for all market participants, CreditLink supports request-for-quote and request-for-streaming trading using a centralized limit check (Ping model) and also gives FCMs and their clients the ability to distribute limits directly to specific trading venues or CCPs to minimize latency (Push model), which is important for buyside firms, executing brokers, interdealer brokers, market makers and exchanges using central limit order books.
The Bank Perspective
“Pre-trade clearing checks are an important part of ensuring a fully automated and seamless process for the centralized clearing of OTC derivatives,” stated Mike Yarian, Global Head of Agency Derivative Services at Barclays. “This initiative provides a pre-trade, low-latency solution to check the certainty of clearing across multiple venues, in compliance with the requirements of Dodd-Frank legislation.”
“Traiana’s trade certainty initiative is helping the industry prepare for the regulatory deadlines of Dodd Frank. We are pleased to have been involved in developing and launching this industry solution,” is the opinion of Peter Johnson, Global Head of Futures & Options, OTC Clearing and Foreign Exchange Prime Brokerage at BofA Merrill Lynch.
“Traiana’s pre-trade clearing certainty initiative is a further example of the industry working together to make markets safer and more efficient,” said Jerome Kemp, Global Head of Futures and OTC Clearing, Citi. “Traiana is a key provider of industry solutions and we are delighted to be part of this effort.”
“Traiana’s cross-product limit management service will allow us to meet our clients’ needs by facilitating the management of credit lines across multiple SEFs. This will allow us to offer customers a low latency pre-trade indication and is an important step toward the ultimate goal of a legally binding credit commitment from both the FCM and the clearing house,” confirmed Andres Choussy, Co-Head of OTC Clearing at J.P. Morgan.
Michael Dawley, Global Co-Head of Futures and OTC Clearing, Goldman Sachs holds the viewpoint that “Traiana’s CreditLink service enhances Goldman Sachs’ ability to manage trading and clearing limits across asset classes, while providing our clients with a centralized limit across trading venues”.
“Traiana is very pleased to be a part of such a significant initiative for the swaps market,” said Andrew Coyne, CEO of Traiana. “By working together with the leading FCMs, venues and clearinghouses, buy-side firms will be able to comply with new clearing and trading mandates without fragmenting their limits or diminishing their access to liquidity.”