MarketAxess Holdings will work with 11 global dealers and the Depository Trust & Clearing Corporation (DTCC) to develop MarketAxess’ trading platform for credit default swap indices (CDS). CDS index trading will be offered in conjunction with cash trading on MarketAxess’ European and US high-grade corporate and emerging markets bond platform.
The network of global dealers include ABN Amro, Banc of America Securities, Bear Stearns, BNP Paribas, Credit Suisse First Boston, Dresdner Kleinwort Wasserstein, Goldman Sachs, JPMorgan, Merrill Lynch, The Royal Bank of Scotland and UBS. MarketAxess expects to launch the CDS index trading system in the second half of 2005.
MarketAxess is also working closely with DTCC’s wholly owned subsidiary, Deriv/SERV, a full-service provider of automated trade processing solutions for a wide range of products in the OTC derivatives market.
MarketAxess is planning to integrate its front-end trading system with Deriv/SERV, allowing it to offer an end-to-end electronic trading solution, virtually eliminating trade discrepancies and expediting the confirmation process. The straight-through processing of credit derivative trades has become particularly important for market practitioners as volumes continue to rapidly increase.
The global market for credit derivatives grew an estimated 137% in 2004 to more than $8.4 trillion at the end of the year, up from an estimated $3.5 trillion at year-end 2003, according to the British Banker’s Association.
