Barx proves catalyst for electronic swaps, says Icap’s Spencer

The move by UK investment bank Barclays Capital to offer live interest rate swaps prices via Bloomberg terminals is the catalyst that will drive the electronic trading of interest rate swaps, according to Icap chief executive Michael Spencer.

“This controversial sell- to buy-side initiative, considered by their peers as high risk at the time, has proven to be visionary and BarCap has gained very substantial market share, not to mention kudos from its move,” said Spencer in an address to the Bond Market Association this week.Icap, the world’s largest inter-dealer broker, has resisted moves to migrate its lucrative swaps business on to electronic trading platforms. But Spencer now sees the move as inevitable.

The UK broker has traded short-dated Eonia swaps via its i-swap platform for the past two months. “In November, we transacted a total of €18.25 billion of electronic business with an average maturity of 4.5 months,” said Spencer.

“We believe we have already materially overtaken the smaller platforms,” Spencer added. These platforms include ATFox, E-Mid and Swapstream.

Spencer plans to offer euro-denominated swaps with maturities out to 50 years in early 2005.