Rio quits Commerzbank to head Swapstream

Swapstream is one of a handful of electronic platforms in the inter-dealer rates market. This now includes Icap’s iSwap, which complements its voice-brokered business for short-dated contracts. Risk’s inter-dealer rankings in September revealed Icap’s continuing lead in the euro swaps market as nominated by traders.

But Rio stressed Swapstream’s neutrality and functionality as a competitive advantage. “Anybody, including Icap, can connect to our platform,” he said. "We allow market participants to customise according to their individual preferences.” This means users can determine their terms of use, including, for example, imposing pre-trade counterparty restrictions. Swapstream also charges users on a per-trade basis regardless of notional amount or duration. The overall result, according to Rio, is the “greatest liquidity and tightest spreads in the electronic interest rate swap industry”.

Asked whether he felt Icap was a competitor, Rio responded: “We are competitors to those who don’t want to partner with us.”

Swapstream has already partnered with Prebon and Gottex - a Swiss broker. Joachim Gottschalk, chairman of Lausanne-based Gottex, said: “Some 20-25% of all swaps trades are currently going through the platform - about double the proportion since the beginning of the year.” Richard Mason, associate director of Prebon’s euro desk, said the proportion of trades going through Swapstream was 10-15% and he expected this figure to rise. “It has improved flow because prices are live,” he added. Mason said it was too early to say whether Prebon's takeover by Collins Stewart Tullett completed yesterday would affect its future relationship with Swapstream.

A senior official at Icap said he had seen no observable impact on its market share, but the largest inter-dealer broker was monitoring developments.