Trio plans swaps platform for Europe

European inter-dealer platform vendor MTS, electronics swaps platform provider ATFox and inter-dealer broker HPC have announced that they have reached a strategic agreement to create a new electronic swaps platform for the European market, reports RiskNews’ sister publication, Dealing With Technology .

The recently inked letter of agreement is expected to lead to an eventual partnership among the participants.

"MTS member banks have been seeking an electronic solution to swaps trading, which can work within the MTS framework," according to a statement from Gianluca Garbi, chief executive officer of MTS. The association with ATFox gives MTS an opportunity to offer clients best-in-class execution through the industry leader, Garbi said. He said the ability for day-to-day interaction with the HPC swaps desk and its pool of liquidity is key to the success of this venture.

It's far too early to discuss all the technical issues involved in such a partnership, said a spokesperson for the MTS, though he added he expected the issues to be settled by the end of the year. The company believes it will start off using ATFox's platform and eventually migrate to its own technology, but this has yet to be confirmed.

In the meantime, ATFox expects to accelerate the growth in its short-term swaps business in order to have a solid foundation to build out its medium- and long-term swaps business. The company also expects to incorporate elements of the MTS business model with regard to corporate governance and close involvement of market participants in setting the strategic direction of the platform.

"We intend to double the number of market-makers' contribution on ATF by year-end and to significantly increase the number of users as well," said Fredric Metz, chairman of ATFox and CEO of HPC, in a prepared statement.