On the first day of trading, euro interest rate swap trades with a nominal value of €1.3bn were matched through the electronic order book.
With the support of large market makers, including Barclays Capital, Deutsche Bank and JP Morgan, the platform provides streaming prices to members, functioning as a multilateral trading facility.
The MTF takes Icap’s existing voice broking liquidity and combines it with an electronic platform, to create a single pool in a wide range of euro IRS instruments with up to 30 years’ maturity.
The platform is open to market making banks that have access to a clearing house for interest rate derivatives. Other banks will continue to have access via Icap’s voice brokers.
Michael Spencer, chief executive of Icap, said in a statement: “OTC dealers have been waiting for an effective electronic interdealer trading system for swaps for some time. This is a major turning point for the largest and most important interest rate market in Europe; bringing greater automation, increased transparency and lower transaction costs.
“All transactions will be captured and recorded electronically, although we expect the most liquid and standardised products to move progressively electronic while the less liquid products remain mostly voice.”
The firm said in July that it was hoping to benefit from the newly signed Dodd-Frank Act, which requires OTC swaps to be traded through swap execution facilities. It hopes to meet the Act’s requirements as an SEF. For now, the new platform is regulated in the UK as an MTF.
In a July statement to investors, Spencer concluded the firm was “well positioned to take advantage of the potential changes in the structure and regulation of the financial services industry, which are now becoming clearer.”
Harry Harrison, head of rates trading at Barclays Capital, called the new platform “a key development”. Chris Willcox, global head of rates at JP Morgan, commented: “As market participants, we are always interested in finding ways to improve trading efficiency. Interest rate swaps trading is a large, diverse and complex activity.
“The use of Icap’s technology by wholesale interbank participants trading euro interest swaps, combined with existing industry infrastructure, will help to mitigate ongoing risks and improve efficiency.”