CORRECT:Barclays And Citadel Announce E-Traded,Cleared Rate Swap
April 15 2011 - 3:23PM
Dow Jones News
Barclays Capital said Friday it has entered two interest rate
swaps with Citadel LLC on Bloomberg's fixed-income trading
platform, clearing one through CME Clearing and the other through
LCH.Clearnet's SwapClear.
The development is another sign of the $583 trillion
off-exchange swaps market moving toward seamless electronic
execution and central clearing.
Barclays acted as the execution dealer on Citadel's trade via
its BARX trading platform, and was also the clearing agent putting
the trade into each clearinghouse.
Dealers are increasingly touting their swap execution and
processing capabilities as the industry faces an overhaul under the
Dodd-Frank law passed last summer in the U.S., and similar efforts
in other global financial centers.
Two key tenets of that law are that certain swaps have to be
traded on open electronic platforms for improved price
transparency, and cleared centrally so that regulators can see
risks building up in the system. U.S. regulators are expected to
finalize the new rules stemming from Dodd-Frank later this
year.
"Electronic execution and real-time clearing of swaps for all
participants fulfills a core objective of the Dodd-Frank bill by
ensuring that our markets are open, transparent and competitive,"
said Gerald Beeson, chief operating officer of Citadel, in a
statement.
It isn't the first such trade of its kind; a U.S.-based asset
manager executed an interest rate swap through rival execution
platform Tradeweb and cleared it through CME Clearing in November,
using Deutsche Bank as both executing dealer and clearing
agent.
But this transaction is unprecedented for Barclays and
Bloomberg, because it is the first time Bloomberg's platform has
simultaneously handled a fully electronic rate swap cleared through
CME. From the point of execution into clearing, there was no
requirement to manually manage any aspect of the trade.
Citadel and another unnamed U.S. asset manager recently did a
similar electronic trade through Bloomberg and CME Clearing, using
Barclays as both its execution and clearing dealer, but that was a
credit default swap, not an interest rate swap.
-By Katy Burne, Dow Jones Newswires; 212-416-3084;
katy.burne@dowjones.com.
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