Meet the new OTC market-makers

New swap trading platforms are often seen as a way of levering open the OTC market for a range of non-dealer market-makers – from opportunistic buy-side firms to aggressive Chicago prop shops. But how many of these firms are serious, and what difference will they make? Joe Rennison reports

It’s one of the great unknowns of derivatives market reform: will non-dealer firms use the new regime, with its all-to-all electronic trading platforms, to take on the banks that have enjoyed a decades-long stranglehold on swap market-making? 

Risk has spoken to nine firms – including hedge funds and asset managers, high-frequency traders and proprietary trading shops – that want a piece of the over-the-counter market’s $693 trillion pie (see box, Indications of interest). Most insist on