Icap launches FRA matching service in Australia

Fra-Cross was set up in January 2002 to allow swaps and FRA traders to align their reset risk. These are vulnerable to future rate fixings.

For example, a trader paying a five-year swap who then receives a five-year swap several days later at a more favourable interest rate still has to deal with the floating legs of the trades. There is a risk that interest rate volatility will cause adverse effects on the profit/loss profile of the portfolio due to rate changes between the two reset dates for the duration of the two swap deals.

Icap said it now has a total of 300 customers from 90 international trading desks representing all the major derivatives trading banks. The broker said 17 major banks have signed up for its Australian dollar service.

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