Icap launches electronic CDS broking
Icap has launched an electronic credit derivatives trading service via its BrokerTec platform, which typically handles Treasury bond and repo transactions.
London-based Icap now joins inter-dealer rivals GFI – which dominated Risk’s CDS broker rankings in September – Creditex and Prebon in having an electronic trading capability for the CDS market. This leaves CreditTrade as the only major CDS broker sticking to pure voice broking. A CreditTrade spokeswoman said the company has no immediate plans to offer an electronic service.
Creditex surprised market participants this year when it launched its electronic platform in February trading credit index products. It charged €500 per trade on notional amounts of €25 million, or €10 million on the high-yield index.
Matt Gibbs, head of CDS broking at Icap, said the BrokerTec platform would be used in a hybrid fashion. “Icap believes the value we add is not only in our technology, but also in our voice broking. This is where our strengths lie,” he said. Although there is full electronic capability, there will continue to be voice interaction with brokers as long as clients demand it. Gibbs said initial electronic volumes had exceeded expectations, but added it was still too early to guage the overall success of the new service.
Electronic broking platforms mitigate the settlement risks encountered in voice broking. This, along with reduced staff costs, allows brokers to charge less. But Gibbs refused to provide Icap's specific charge structure, saying only that the broker offers a flat rate fee that represents a “fair reflection” of the risks involved.
Icap estimates its combined voice and electronic share of the US Treasury market rose from 41% in the third quarter of 2003 to 58% in the third quarter of 2004. Trading volume was up by 59% to US$9 trillion in the same period.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Technology
Dismantling the zeal and the hype: the real GenAI use cases in risk management
Chartis explores the advantages and drawbacks of GenAI applications in risk management – firmly within the well-established and continuously evolving AI landscape
Chartis RiskTech100® 2024
The latest iteration of the Chartis RiskTech100®, a comprehensive independent study of the world’s major players in risk and compliance technology, is acknowledged as the go-to for clear, accurate analysis of the risk technology marketplace. With its…
T+1: complacency before the storm?
This paper, created by WatersTechnology in association with Gresham Technologies, outlines what the move to T+1 (next-day settlement) of broker/dealer-executed trades in the US and Canadian markets means for buy-side and sell-side firms
Empowering risk management with AI
This webinar explores how artificial intelligence (AI) can strip out the overheads and effort of rapidly modelling, monitoring and mitigating risk
Core-Payments for business leaders: why real-time access to payment data is key to long‑term business success
Business leaders require easy access to timely, reliable and complete information across post-trade processes. Aside from the usual requirements of senior managers to optimise for risk, revenues and costs, they increasingly need to demonstrate to their…
Risk applications and the cloud: driving better value and performance from key risk management architecture
Today's financial services organisations are increasingly looking to move their financial risk management applications to the cloud. But, according to a recent survey by Risk.net and SS&C Algorithmics, many risk professionals believe there is room for…
Machine learning models: the validation challenge
Machine learning models are seeing increasing demand across the capital markets spectrum. But how can firms improve their chances of gaining internal and regulatory approval for these type of models?
