ICAP’s pre-trade risk and post-trade processing subsidiary Traiana has announced today that it has extended the scope of its CreditLink service to include a kill switch capability for single dealer platforms in foreign exchange (FX) trading. Citi’s platform, Velocity, is the first single dealer platform to enhance its connectivity with CreditLink to support this new capability.
The introduction of a kill switch adds to the existing limit monitoring capabilities of CreditLink for single dealer platforms, and will ensure that the risks associated with algorithmic and high frequency trading can now be effectively managed in real-time on these platforms.
In July last year, Traiana executives were present at a panel in London which discussed the establishment of swap execution facilities (SEF) and consisted of many institutional FX participants including senior executives of large interbank FX departments, during which the consensus was that single dealer platforms continue to be in favor among banks as they allow major FX dealers to maintain closer contact with their customers, as well as mitigate extremely complex bureaucracy.
Jill Sigelbaum, Head of FX, Traiana said: “The expansion of CreditLink’s kill switch to single dealer platforms improves risk management controls in the FX markets, bringing the bank trading portals into line with the capabilities we’ve built with the ECNs. By enabling prime brokers and their clients to monitor risk in real-time and take swift actions, the market will be further insulated from technology risks and the losses they can rapidly create.”
Bapi Maitra, Global Head of FX Institutional e-Commerce Sales, Citi said: “We at Citi have been very focused on enabling industry-wide solutions to reduce systemic risk and promote transparency. The implementation of Traiana’s real-time risk management capability, including its kill switch, is a vital step in that direction. We are excited to partner with Traiana to take a leading role on these initiatives, and to provide best-in-class risk control solutions for our clients.”
Beginning in June 2011, Traiana and leading prime brokers launched an initiative to deploy real-time kill switches to major multi-dealer FX trading platforms, including Bloomberg Tradebook, Currenex, EBS, FastMatch, FXCM’s Institutional Platform, Hotspot FX and Thomson Reuters. However, in recent years electronic FX trading has grown on single dealer platforms and now represents a key area of technology risk in global FX markets.
Using CreditLink, prime brokers have the ability to monitor their clients’ credit risk and trading activity across multiple ECNs and single dealer platforms on a real-time basis. As a result they can identify limit breaches, modify credit lines and terminate trading activity. CreditLink also supports a wide range of asset classes and trading models, serving as a central risk management infrastructure across spot FX, FX derivatives, cleared swaps and exchange traded derivatives.