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2007 was a busy year for the product team with an increased pace of new releases - five during the year. We added support for a raft of new products and features including inflation swaps, non deliverable swaps, equity total return swaps, additional underlyers for equity options and more life cycle events across a wider range of existing products. We plan to keep up the pace in 2008, with a release about every two months. So what's on the slate? Release 5.0 is already available for UAT, and is due to go live in January. This feature-packed release is one of our biggest in the last year and includes: Products
Processes
(see release notes on our website for an exhaustive list)
Markit, the leading provider of independent data, portfolio valuations and OTC derivatives trade processing to the global financial markets, announced in December that it had agreed in principle to buy SwapsWire. The acquisition is expected to complete in early 2008, subject to agreement of definitive documents, due diligence, shareholder and regulatory approval. Markit and SwapsWire are already working on the integration of the two platforms. Markit Trade Processing clients can now see the status of trades in SwapsWire reported centrally. Soon clients will enjoy a two-way interface which will auto-confirm trades in SwapsWire when they are uploaded and locally matched on Markit Trade Processing.
Equities - Client On-boarding Steams Ahead Last October saw 18 major market participants write their second letter to the New York Fed. The letter outlined the banks' strategy to increase automation for processing OTC equity derivatives trades. Progress in improving operational efficiency for equity derivatives confirmations was good throughout 2007. All firms met their commitment to process 70% of inter-dealer trades electronically and to reduce confirmation backlogs by 55% by the end of September. Additional standardized inter-dealer Master Confirmation Agreements were also introduced to improve automation. The future strategy focuses on a three-phase approach to deal with on-boarding buy-side clients to electronic confirmation platforms. 1. Negotiate and develop six buy-side MCAs August 2008 With its easy to use, web-based interface, SwapsWire offers the ideal solution to enable buy-side clients to confirm trades electronically. SwapsWire supports all Client Eligible Transactions that are included in the initial electronic matching target (index and single-name European options and index and single-name European, US, Asia Ex-Japan and Japan Variance Swaps) as well as additional products such as Dividend Swaps and Equity Swaps. Client on-boarding will be further streamlined through the emergence of a number of Prime Brokers who offer credit intermediation on Equity Options and Equity Variance Swaps using the PBWire service. Contact us for further details of how we can help your on-boarding teams. Click here to read more about the industry's Equity Derivative Client On-boarding Strategy.
SwapsWire Volume Growth Continues The FT reported at the end of November that OTC derivatives volumes were falling as the market succumbed to concerns over the stability of the global banking system. Even taking the Thanksgiving Holiday into account, liquidity was greatly diminished and investors appeared reluctant to take on more risk in the run up to the year end. This picture wasn't reflected in SwapsWire's numbers, however, where volumes continued to trend significantly higher over the final quarter, with December showing robust levels while taking into account a normal seasonal dip. Despite dramatic volume increases during the year, SwapsWire continued to see a very high and steady percentage of confirmations completed on trade date. There was no increase in confirmation backlogs for trades processed this way, demonstrating SwapsWire's unrivaled ability to make operations processing truly scaleable. The graph below shows volume growth on SwapsWire during 2007
SwapsWire Shortens Confirmation Backlogs Financial News ran an article in November suggesting that the credit default swap (CDS) market could look to the interest rate swap (IRS) market (where the majority of trades are processed by SwapsWire) to prevent a recurrence of the strain on back offices that happened over summer 2007. The turbulent conditions meant that volumes in both the CDS market and the IRS market spiked over the summer. August's average monthly trading figures in the CDS market more than doubled from the previous year. The average amount of outstanding trade confirmations aged more than 30 days rose to over 3,000, up from about 1,500 in the same period last year - and the paperwork started to mount up. Trade volumes approximately doubled - but so did the level of outstanding confirmations. It was a different story in the Interest Rate Swap market, however, where most of the trades are captured at the point of trade on SwapsWire, affirmed and confirmed the same day. This allows mismatches to be resolved immediately by the front office. The deal is at the front of everyone's mind and downstream processing problems are reduced. Volumes rose by around 40%, but the amount of confirmations outstanding beyond the critical 30-day trade point rose by just 14%. SwapsWire's level of outstanding trades remained at a very low level throughout (less than 1% by T+3), implying that the increase was almost entirely due to increased backlogs for paper-based confirmations. Subscribers to Financial News click here to read the whole story. |
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For more information about any of the articles in this newsletter, please e-mail info@swapswire.com or call your nearest regional office. London +44 (0) 870 760 5625 • New York +1 646 429 1725 • Tokyo +81 3 4360 8368 |
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