Trad-X, a hybridized platform for interest rate derivatives, has just launched an innovative dealer-to-client (D2C) pure electronic central limit order book (CLOB), according to a company statement.
The effort represents the first of its kind in the industry, having already successfully completed live transactions between dealers and non-dealers.
Trad-X has cut its teeth in the industry dealing with hybrid and fully-electronic order entry.
In doing so, its services allow users to execute the trading strategies via voice, direct click-and-trade central limit order book access, and auction services.
“The completion of our first trades between dealer and non-dealer counterparties validates our model, proving it to be a credible alternative to RFQ protocols. We expect this to be particularly beneficial for non-dealers trading standardized interest rate swap products, as it enables access to pricing for a wide range of trading instruments from multiple dealers in a very cost effective manner,” explained Dan Marcus, CEO of Trad-X.
The group’s new CLOB is already executing trades after an early successful running. AEGON Asset Management formally became the first buy-side institution to execute a euro IRS trade on Trad-X’s D2C CLOB, with BNP Paribas serving as the counterparty, cleared by Eurex Clearing.
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The optimism was extended by Derek Milner, Senior Portfolio Manager at AEGON Asset Management, who noted: “This is a genuine step forward in terms of innovation. We hope this gains traction across the market and increases the quality of pricing and efficiency of execution for all market participants.”
Indeed, Trad-X D2C does bestow a wide range of benefits, serving as a pure electronic MTF CLOB offering impartial access.
The platform allows for qualified dealers to provide liquidity for clients that can execute on existing liquidity, while also placing live resting orders.
Furthermore, Trad-X D2C was specifically engineered to help extend several benefits to dealers with an emphasis on the CLOB model.
More specifically, this relates to considerations in real-time, executable pricing with live updates for a wide range of swap products, as well as tighter spreads and reduced information leakage.
This stance was echoed by Danny Chart, Head of Fixed Income Business Development at Eurex Clearing AG: “This innovative platform provides our buy-side clients with access to a viable alternative liquidity pool – further increasing execution protocol options, distribution of price discovery and depth of market – as well as facilitating our development of an EU-based alternative for Euro Clearing at Eurex.”