OTCX announced on Thursday that it has facilitated the world’s first electronic non-deliverable interest rate swaps in a number of emerging market currencies. The currencies in question are the Colombian Peso (COP), Malaysian Ringgit (MYR), Chilean Peso (CLP), Chinese Yuan (CNY) and the Taiwan Dollar (TWD).
According to the statement, the development reflects the industry’s demand to digitize manual processes in over the counter (OTC) derivatives trading. This is driven by increased regulatory reporting obligations and cost constraints.
OTCX owns and operates an over-the-counter and multi-dealer derivatives platform. With the execution of the interest rate swaps, the operator is now also the first to facilitate two-way electronic price discovery in more than 27 currencies. These cover both G10 and emerging market currencies.
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Commenting on the development, Nicolas Koechlin, founder and CEO of OTCX, said: “We’re expanding our growing emerging markets capability and pioneering the digitisation of the OTC derivatives market.”
“It is essential to overcome the needless obstacles and friction of voice and chat with a solution that offers greater transparency and access to prices across the spectrum of currencies and markets. Our goal is to accelerate this process with innovative technology that serves the buy side, sell side and end investor.”
OTCX aims to digitize the global OTC derivatives market
OTCX automates the relationship between buy side and liquidity providers in vanilla and exotic derivatives. This is typically a manually intensive relationship. The derivatives platform operator uses a browser-based digital portal to replace voice and chat with Straight Through Processing (STP). It also incorporates analytics, which together increases the efficiency of the process.
In the past, OTCX has been active in Interest Rate Derivatives for new risk and compression in Singapore Dollar (SGD), Brazilian Real (BRL), Czech Koruna (CZK), Israeli Shekel (ILS), Korean Republic Won (KRW), Hungarian Florin (HUF), Thai Baht (THB), Polish Zloty (PLN), Mexican Peso (MXN), Indian Rupee (INR), Hong Kong Dollar (HKD), and South African Rand (ZAR).