Q-Wixx completes first CDS portfolio trade


Q-Wixx, a new electronic platform for trading credit derivatives portfolios, has conducted its first electronic trade of a bundle of credit default swap (CDS) contracts.

The trade involved four dealers - Credit Suisse, Deutsche Bank, Goldman Sachs and JP Morgan - and the credit-focused hedge fund Cairn Capital. The portfolio included 131 North American and European names, totalling $1 billion and EUR500 million, respectively, and was executed in 10 minutes using the platform. According to Q-Wixx's parent company, New York-based electronic trading platform Creditex, putting these types of transactions through manually would typically take hours - and up to a day in the case of large portfolios.

The platform was designed to create processing efficiencies when executing 'offers wanted in competition' and 'bids wanted in competition' transactions - lists of large numbers of names with notionals of more than $1 billion or EUR1 billion. Typical lists involve 70-80 names, although some involve several hundred, and have notional values of hundreds of millions of dollars. The market often sees seven to 10 portfolio deals a day.

Q-Wixx is in the process of being spun off from Creditex. The parent company hopes electronic trading will make trading in credit derivatives faster and more efficient. At present, trading a portfolio involves contacting multiple dealers for valuations of each name in the portfolio, a lengthy and labour-intensive process that is also prone to error. Transferring lists of prices from spreadsheet to spreadsheet by hand involves significant risk, says Mazy Dar, New York-based chief strategy officer at Creditex. "A lot of the time, dealers have to fix prices for 30 minutes - that creates a lot of market risk," he notes.

As a result, dealers tend to be conservative in their pricing, with a margin to allow for market movements. A faster response time would allow more aggressive pricing, and therefore a more efficient market. "Q-Wixx gives our clients a very efficient platform that provides the assurance of execution and the necessary transparency," says Guy America, head of credit trading at JP Morgan in London.

Alexander Campbell.

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: