MarketAxess launches CDS index trading platform

MarketAxess has launched a multi-dealer credit default swap (CDS) index trading service in London and New York. The New York-based company is targeting end-users to use the service.

CDS indexes will be offered in conjunction with cash trading on the company’s US and European high-grade corporate and emerging markets bond platform. But single-name CDS trading is not expected until next year.

MarkAxess has also appointed Andy Brindle, JP Morgan’s former global head of credit derivatives, as a senior adviser for its credit derivatives business.

“From pre-trade to post-trade, our solution is designed to eliminate trade errors and discrepancies through a robust trade verification and auto-matching and confirmation process,” said Richard McVey, chairman and chief executive of MarketAxess.

The Financial Services Authority in London and the New York Federal Reserve recently expressed concern that a growing backlog of unconfirmed trades was threatening to stunt the future expansion of the rapidly growing credit derivatives industry. MarketAxess has sought to allay these fears by developing its new platform with Deriv/SERV, the Depository Trust & Clearing Corporation’s automated straight-through processing service, and Markit’s Reference Entity Database.

Eleven dealers are backing the service and have helped MarketAxess to develop the new platform, including ABN Amro, Banc of America Securities, Bear Stearns, BNP Paribas, Dresdner Kleinwort Wasserstein, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, the Royal Bank of Scotland and UBS. However, of these only eight have integrated their trading systems with MarketAxess at launch, with the others “expected to be live within weeks”.