Tradition, an interbroker deal, has launched its Elixium trading platform, which is expected to go live in May in a bid to meet a recent groundswell of demand for access to collateralized liquidity, per a recent Tradition statement.
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Elixium will operate as an EU-regulated multilateral trading facility (MTF), encompassing both collateral and secured deposits. The key impetus behind the development of Elixium has been a singular focus to address an open peer-to-peer (P2P) regulated marketplace. In tandem with this, growing liquidity concerns have also necessitated out of the shifting regulatory climate, which Elixium will aim to help remedy.
Given its aims, Elixium has opted to utilize a standardized legal framework, complete with a uniform methodology that features collateral schedules and an underlying credit matrix – this allows for rapid counterparty diversification, thereby helping disseminate counterparty risk to help aggregate market participants in fully transparent and equitable basis.
Elixium will be catering to a wide range of entities and venues, including corporates, central banks, sovereign wealth funds, asset managers, pension funds, insurance companies, government institutions, hedge funds, brokers, dealers, and banks, among others.
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With a May 2016 launch date in focus, Elixium has already unveiled plans to expand to upwards of 40 collateral baskets, covering fixed income and equities in GBP, EUR, USD, CAD, JPY, in conjunction with a pantheon of emerging market currencies.
New Management Focus
In tandem with the launch specifics, Elixium has also announced a plethora of senior appointments to its management team to help lead the group forward. In particular, Roberto Verrillo has been appointed as its newest Chief Strategy Officer, who will maintain responsibility across Elixium’s strategy and markets.
In addition, Gabriele Frediani joins Elixium as its Chief Business Development Officer, who will be tasked with overseeing all international expansion. Finally, Nick Van Overstraeten also lands at the group as its Director of Product Development. All three individuals will be reporting to Nick McCall, Chief Executive Officer (CEO) at Elixium.
According to Mr. McCall, in a recent statement on the launch: “The repo and collateral market is a critical source of funding for many institutions but is balance sheet intensive. As institutions come under pressure as a result of regulatory changes such as the Liquidity Coverage Ratio and Net Stable Funding Ratio, a reduction in balance sheets has impacted the depth of liquidity available.”
“By establishing a peer-to-peer network and offering full counterparty control, we are enabling greater access and price discovery for many non-bank institutions such as asset managers, CCPs, corporates and insurance firms, which are increasingly being seen as key sources of liquidity in the repo market,” he added.
“Legacy trading models are no longer as relevant in today’s market as they once were. Financial institutions are re-structuring their product offerings and businesses in light of regulatory and structural shifts in the dynamics of how markets operate. Elixium is designed as a direct result of these changes and we hope to be at the forefront of this evolving market over the coming years,” reiterated Mr. Verrillo, in an accompanying statement.