Buy-side Achieves Pre-Trade Clarity for Clearing Swap Trades on Tradeweb

There has been a lot of hype about how buy-side participants will stay informed of their available credit with clearing banks to ensure their swaps trades will clear as mandated by Dodd-Frank. In fact, the debate started well over a year ago with the joint formation of a working group by the FIA and ISDA to address the need for what the industry dubbed “clearing certainty.” 

A range of protocols came into play as market participants and trading venues explored solutions, including real-time pinging, a daily push of data, and processing hubs to deliver credit information to market participants as they trade. And months later, according to Risk Magazine, third party vendors are working to launch competing clearing hubs. 

For market participants trading derivatives on Tradeweb, the wait is already over. 

Earlier in May, Tradeweb executed the first fully electronic pre-trade credit check for an over-the-counter derivatives transaction. Using the ping-based functionality of the hybrid credit checking solution from Tradeweb, a buy-side client successfully executed an electronic interest rate swap trade with J.P. Morgan acting as the clearing bank. 

Integrated at the point of execution, Tradeweb customers are now able to check for credit ahead of executing a swap transaction in an efficient and cost-effective way – an essential step for a majority of financial institutions preparing for mandatory clearing of derivatives trades beginning on June 11th under Dodd-Frank. 

For more information about the solution for pre-trade credit checking on the Tradeweb derivatives platform, click here or here for a related press release.