Icap’s new system hits €10bn

INTER-DEALER broker Icap notched up interest rate swap (IRS) trades with a nominal value of over €10bn (£8.36bn) in the first week of trading on its electronic market.

The figure represented 15 per cent of the total number of Euro IRS trades passing through the firm’s order book over the week, with 13 major banks already signed up to the system, chief executive Michael Spencer said.

“By using our technology banks are able to execute trades that they would not previously have been able to match,” he added. “We expect that the volume of business will continue to grow as more banks are connected and more streaming prices are added to the platform.”

Icap expects to have around 24 banks on board with the electronic system before the end of the year.

It has developed the market in response to calls from regulators to improve transparency in the over-the-counter (OTC) derivatives area in the wake of the collapse of Lehman Brothers.

In June, the US Congress passed its marathon bill detailing reforms to financial regulation, which included tighter rules on trading derivatives, including parking desks trading the riskier types of instruments into subsidies with their own pools of capital.
The EU is also lobbying for stricter regulation of the derivatives market, arguing that more instruments should be cleared through central clearing houses to guarantee counterparty payment in the event of a future bank failure.