Tradeweb applies with CFTC to offer first credit-swap trading

October 29, 2013 02:44 PM
Trading in trillions of dollars of derivatives at stake

Tradeweb Markets LLC asked U.S. regulators to make it mandatory to trade credit-default swaps on its new government-mandated platform.

Tradeweb’s is the first application to the U.S. Commodity Futures Trading Commission to cover credit swaps. The bond- andderivatives-trading network, whose owners include Wall Street’s biggest banks and Thomson Reuters Corp., said it applied to offer contracts based on the Markit iTraxx Europe Index and the Markit CDX indexes tied to coporate debt in the U.S. and Canada. The New York-based company also applied to offer interest-rate swaps, according to today’s statement.

The step is part of a process that eventually will move trillions of dollars of derivatives to government-mandated platforms under the Dodd Frank Act. While swap execution facilities were required by the CFTC to be ready for business by Oct. 1, trading on them is still voluntary. Once approval is granted for an application such as Tradeweb’s, swap users will be forced to buy or sell contracts on the new systems.

Javelin Capital Markets LLC and TrueEX Group LLC became the first SEFs to file a request with the CFTC earlier this month, both to offer interest-rate swap trading.

Bloomberg LP, the parent of Bloomberg News, has received approval to become a SEF from the CFTC and competes with Tradeweb, TrueEX and Javelin for swaps-trading business. Bloomberg LP also competes with Thomson Reuters in financial news and data.

Banks, which historically won wide profit margins from negotiating swaps transactions, have fought the shift to trading the contracts on SEFs. Amid industry lobbying, Congress revised the rules governing the platforms at least five times while the legislation was being written.

Tradeweb’s owners include Bank of America Corp., Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley.

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