SwapsWire claims ‘imminent’ launch after tech delays

SwapsWire, a consortium-owned interdealer interest rate derivatives trading system, says it has overcome a raft of technology problems that delayed its launch. It hopes to go live "imminently" with most of its 23 shareholders, but did not offer a specific date.

The firm will initially offer interest rate swaps, but plans to expand its rates coverage to include options, swaptions and cross-currency swaps. Chief marketing officer Henry Hunter said the initial vanilla interest rate swaps account for the bulk of the market, and that the top priority is to get the system working, then expand from there.

Formed in April 2000 by a group of six banks, SwapsWire should have gone live in the first quarter of 2001. The launch was then rescheduled for late 2001. The system was to initially trade euro and sterling swaps in Europe with around 20 shareholder firms, with US dollar swaps to be added two to three months later, when New York dealers were expected to join the system. But again, the launch didn't happen, and SwapsWire failed to gain regulatory support from the UK’s financial services regulator, the FSA, until August last year.

Hunter said delays stemmed from technology problems, requiring the system to be tested over and above the original plans. He said initial software testing showed that the system was not performing correctly in more than one area, but refused to provide more specific details. "Software has bugs. When you test, you find bugs, and bugs have to be fixed. That's not a complicated issue," he said. But in this case, he admits the problem was major enough that SwapsWire could not go live according to either of its original launch plans.

Technology firm AVT is providing the underlying software, while Syntegra is the software integrator. Neither firm responded to enquiries by press time. SwapsWire runs on a Sun Solaris CPU cluster, and uses an Oracle database. Client software runs on Windows/Windows NT. A member bank's front, middle and back offices connect to the bank's LAN, then via a VPN gateway to the SwapsWire private network, which uses Nokia security technology. The VPN then interfaces to SwapsWire's central server hub.

SwapsWire provides APIs for integration with credit, risk and deal capture systems, while a desktop API supports links to Microsoft Excel. Trades are described in FpML, an XML-based standard for electronic OTC derivatives trading.

The company aims to enable swaps dealers to trade directly and electronically on a named basis.