Interest rate derivatives platform Trad-X has announced last week that it has launched a dealer-to-client (D2C) pure electronic central limit order book (CLOB) and has already completed a number of live transactions between dealers and non-dealers.
AEGON Asset Management first executed a euro IRS trade on Trad-X’s D2C CLOB. BNP Paribas was the counterparty, and the transaction was cleared by Eurex Clearing AG.
Francois Puget, Head of G10 Rates Trading Europe at BNP Paribas, stated:
We are delighted to be the first dealer to execute a transaction on Trad-X D2C CLOB which underpins our commitment to provide the best comprehensive offer to fit our clients’ needs. Supporting innovation in collaboration with Trad-X and Eurex further emphasises BNP Paribas’ leadership as a market maker in interest rate derivatives and our expertise in electronic execution.
Through Trad-X D2C dealers (qualified under fair and objective criteria) provide liquidity for clients that can execute on existing liquidity, as well as place live resting orders.
Trad-X D2C replicates many of the benefits offered to dealers trading via a CLOB model, including includes real-time, executable pricing with live updates for a wide range of swap products, tighter spreads and reduced information leakage.
Dan Marcus, CEO of Trad-X, commented on the news:
The completion of our first trades between dealer and non-dealer counterparties validates our model, proving it to be a credible alternative to RFQ protocols. We expect this to be particularly beneficial for non-dealers trading standardised interest rate swap products, as it enables access to pricing for a wide range of trading instruments from multiple dealers in a very cost effective manner.
Derek Milner, Senior Portfolio Manager at AEGON Asset Management, added:
Trad-X’s central order book for non-dealers lowers barriers to market entry and we are pleased to be the first institution to complete a trade with a dealer on the platform. This is a genuine step forward in terms of innovation. We hope this gains traction across the market and increases the quality of pricing and efficiency of execution for all market participants. We believe the main advantages of this platform are certainty of execution, anonymity and access to offsetting non-dealers’ exposures.
Danny Chart, Head of OTC Product & Clearing Business Development at Eurex Clearing, said:
The D2C CLOB enhances price distribution for Market Makers, connecting them to a broader client base which is perhaps not normally accessible on a bilateral basis. This innovative platform provides our buy-side clients with access to a viable alternative liquidity pool – further increasing execution protocol options, distribution of price discovery and depth of market – as well as facilitating Eurex Clearing AG continued development of an EU-based alternative for Euro OTC Clearing.