RBS debuts trading of electronic inflation swaps

The RBS inflation trading engine provides a real-time tradable market to be streamed to customers’ desktops for the first time. The engine covers the main European indexes: the Eurozone consumer price index (Eurozone CPI), the UK retail price index (UK RPI) and French consumer price index excluding tobacco (French CPIxt). RBS is offering zero-coupon inflation swaps, which accounts for the majority of the inflation derivatives market.

“RBS believes the inflation swap market is now ready for electronic trading, and will continue to break boundaries in 2006 and beyond with new markets, more flexibility in the products and wider means of distribution,” said Charles Harris, head of inflation trading at RBS in London.

Traders that sign up to trade using RBS’s engine have the option of choosing to execute swaps from one year to 50 years in maturity, using either click-to-trade or request-for-quote protocols. Confirmation is immediate on both methods of execution.

The trading engine uses straight-through processing, which means the deal books into the trader’s risk management system and the client’s confirmation arrives automatically. Full trade details and trading history are available to the customers and their support staff through the Bloomberg platform.