London-based Tullett Prebon PLC is on track to launch an online platform designed to match up carry trades for members of the London Metal Exchange (LME), as new regulations and squeezed revenues push the interdealer broker to explore new markets.
Tullett Prebon will open its algorithmic matching system, tpMATCH, to LME’s 41 category 1 and 2 members early next month to help investors buy or sell illiquid positions known as broken-dated carries, a practice that has historically been complicated and non-transparent.
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This type of trade occurs when an investor deploys a long-term liquidity structure, where he can only settle trades at specific or multiple dates that can range from once every quarter to once every few years.
tpMATCH is designed to simplify arranging such transactions and make trade settlement more efficient, less risky and less time-consuming. It will allow LME traders to submit their orders and positions into the platform, which will apply its matching technology in twice weekly runs, as noted in the company’s release.
Paul Ribbins, Managing Director of Tullett Prebon’s Risk Management Solutions division, commented: “We believe tpMATCH will help members to manage their broken-dated card risk by centralising liquidity, creating cost efficiencies and maximising volume through algorithmic matching technology, which has never been used in the base metals market before. We hope to build a strong position in the market and we will continue to look for further opportunities across the broader commodities space.”