TeraExchange and European Brokers Reach Landmark SEF Trading Agreement
SUMMIT, N.J., Jan. 15, 2014 /PRNewswire/ -- TeraExchange, a multi-asset swap execution facility (SEF), has executed agreements with multiple inter-dealer brokers (IDBs) to provide fully-compliant execution and reporting services for swap trades. This allows over 100 banks and international bank affiliates to confidently conduct their swap executions while adhering to US regulations requiring SEF trading and reporting.
Under Dodd-Frank, all swap trades involving US Persons, whether trading domestically or internationally, must be executed through a CFTC-registered swap execution facility. IDBs servicing US banks (either an international branch or guaranteed affiliate) must therefore either become a SEF or execute their trades through a SEF.
The initial IDBs working with TeraExchange include OTCex and RP Martin, two of Europe's most diverse and active IDBs. As more domestic and international IDBs complete their registration as Introducing Brokers with the National Futures Association and execute agreements with TeraExchange, the community will grow.
Execution of the IDBs' dealer transactions on TeraExchange's independently-owned SEF provides the benefit of open access, pre-trade credit checking, execution on a regulated platform, central clearing and swap data repository reporting. It also avoids the need for the IDBs to build and operate a proprietary SEF. Notably, TeraExchange will list all the Made Available to Trade (MATT) instruments for Required Transactions per the CFTC Rules, in addition to all other instruments for Permittted Transactions across Rates, Credit, Equity and Currency Swaps.
"We offer a solution that takes away legal uncertainty and provides a clear path for regulatory compliance," said Christian Martin, CEO of TeraExchange. "Markets and market participants need certainty to thrive; with these agreements in place the path is available for brokers and their dealers alike to move forward with trust and confidence."
"TeraExchange offers a readily accessible, multi-asset, flexible marketplace providing trading protocols similar to our existing trading protocols. It is a straightforward transition for our business, providing a cost-efficient and speedy alternative; most importantly this agreement gives our dealer clients peace of mind on the regulatory front," said Ian Spittlehouse, Directeur administrative, Manager of OTCex, London.
"By working with TeraExchange, we provide a seamless and secure transition to the new regulatory regime for our dealer clients," Stephen Welch, CEO of RP Martin.
TeraExchange is a regulated, multi-asset class swap execution facility offering market participants an anonymous, multi-asset class central limit order book (CLOB) for swaps, as well as "directed orders" within the order book, request-for-quote (RFQ) and request-for-market (RFM) trading protocols.
TeraExchange is a swap execution facility offering market participants an anonymous, multi-asset class central limit order book (CLOB) for OTC derivatives, with the additional options of "directed orders" within the order book, request-for-quote (RFQ) and request-for-market (RFM) trading protocols. TeraExchange offers trading in interest rate swaps, credit default swaps, and FX/NDFs, and has clearing agreements in place with CME Group, LCH.Clearnet and ICE.
With benchmark and bespoke instruments listed, TeraExchange enables participants to initiate, hedge, consolidate or terminate a diverse set of risk positions. TeraExchange also offers institutional investors a direct-to-dealer (or request-for-quote) trading protocol, compression and unwind services for full life-cycle management.
In addition to its core trading platform, TeraExchange offers two other trading tools for institutional investors. TeraDirect is a front-end execution management system that provides real-time pricing from a range of non-swap execution venues, as well as other tools to trade on TeraExchange and those other venues. TeraCheck is a proprietary pre-trade credit risk management and monitoring engine for market participants and their clearing members. TeraCheck integrates with in-house and external credit hub systems. Participants may also connect to TeraExchange via FIX, FAST, FpML and other protocols.