Swapstream market-makers raise quote size to €800m
The four banks making markets on electronic interest rate swaps trading platform Swapstream have raised their quote sizes from around €100 million to €200 million apiece.
While Swapstream director Andre Keijsers described the increase in quote size as an important stage in the platform’s evolution, he refused to provide details of trading volumes, customer numbers or the tightness of bid/ offer spreads.
Dealers say trading on Swapstream has proven fairly sporadic, although they are happy with the overall development of the service. Trades of €200 million for 10-year swaps and €50 million for 30-year swaps happen “every now and again”, says one market-maker.
But these transactions are limited between the four market making banks - ABN Amro, Commerzbank, Dresdner Kleinwort Wasserstein and HypoVereinsbank. Customer flows are practically non-existent, although between four and six customers have signed up to the service in the past three months.
Dealers are now courting second- and third-tier banks to sign up to Swapstream. They believe banks lacking a customer distribution force that need to trade anonymously at fair-market levels should find the platform appealing. The service can also help banks that possess the risk management capabilities to allow them to quote broken date – for example, nine and a half years – swaps prices and hedge themselves on plain vanilla bullet securities offered on Swapstream.
Swapstream is the only multi-dealer platform for medium- to- long-dated swaps. The Blackbird platform developed in the US is effectively in ‘moth balls’ following the firm’s acrimonious scrap with former shareholder, UK inter-dealer broker Icap. Other electronic swaps platforms such as ATFox – created by the merger of atenX and iFox in May 2002 – target the short-term European overnight index average swaps market.
Barclays Capital, however, offers an electronic swap service through Bloomberg. The UK bank is committed to offer quotes of less than three quarters of a basis point from mid. But Swapstream’s backers believe their service offers tighter prices. “You have four market-makers and four curves with a bid/offer spread of maybe the same or less than Barclays, so the net result will be even tighter,” says one.
Swapstream now plans to add futures crossing, where dealers hedge out interest rate exposures, to its service in the third quarter, and has scheduled to start trading US dollar-denominated swaps early next year.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Risk management
Transforming the trade lifecycle with pricing and reference data in the cloud
LSEG is developing its cloud-based data service to reflect how financial institutions now use information to feed systems and generate insight
Clearing houses warn Esma margin rules will stifle innovation
Changes in model confidence levels could still trip supervisory threshold even after relaxation in final RTS
Institutional priorities in multi-asset investing
Private markets, broader exposures and the race for integration
12 angry members: why dissent is growing on the FOMC
Hardening views on wisdom of further cuts mean committee’s next meeting is unlikely to be harmonious
LSEG streamlines post-trade efficiency across cleared and uncleared markets
LSEG’s Post Trade Solutions extends clearing-style efficiencies to bilateral markets, helping Apac clients navigate rising margin and risk management pressures
Squashing CVA still dominates XVA desks’ priorities
Dealers favour options-based strategies to manage charges; some explore contingent CDSs amid rising exposures
EU single portal faces battle to unify cyber incident reporting
Digital omnibus package accused of lacking ambition to truly streamline notification requirements
XVA desks prioritise core tech upgrades over AI
Vendor upgrades, cloud-native rebuilds and sensitivities tooling dominate 2026 budget road maps