Robot risk managers excite swap market-makers

Foreign exchange options and government bonds are hedged by robots, and dealers hope to apply the same technique to rates products as the market becomes more electronic. But it needs other pieces of the puzzle to fall into place first, Lukas Becker reports

Stéphane Malrait, Societe Generale CIB

In the swap market of tomorrow, prices will be made, executed and risk managed by algorithm – a low-cost, high-volume vision of the future that has obvious appeal for a business struggling to hit its return targets. The idea has been held back by a lack of electronic venues with which robot traders can interact, but the arrival of swap execution facilities (Sefs), which are required to offer order-book trading, brings it a big step closer.

"Everyone is looking at this right now. I don't think

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