This development is expected to enhance pricing transparency and execution quality in the interest rate swaps market, which has found itself behind other markets in adjusting to electronic trading.
Bloomberg will initially allow ten major global banking institutions to participate in the new multi-dealer platform, of which five will go live throughout the week. These include Morgan Stanley, ABN AMRO, Bank of America, Barclays Capital and RBS.
Users of the system will be able to request quotes from three participating banks through a request-for-quote (RFQ) model. Trade confirmation is handled electronically using straight-through processing (STP) in an attempt to improve efficiency and reduce the risk of pricing and trading error.
The unveiling of Bloomberg’s service follows on from the announcement by Thomson TradeWeb that its euro swaps platform has signed up JPMorgan, Barclays Capital, Morgan Stanley, Dresdner Kleinwort Wasserstein, HSBC and ABN Amro.
Both Bloomberg and Thomson believe their electronic offerings will develop better transparency for clients and reduce operating costs.
The initial release of Bloomberg SwapTrader supports Euro denominated benchmark swaps. Streaming indicative prices ensure that users are kept in touch real-time with changing market levels.
