Swapstream

From MarketsWiki
Jump to: navigation, search
CMEFutInst300.jpg

Swapstream
Founded 2003
Headquarters London
Key People Stephane Rio, CEO
Products Electronic trading platform for OTC swaps; wholly owned subsidiary of CME Group
Website http://www.swapstream.com

Swapstream is a global, over the counter electronic trading platform for interest rate swaps.[1] It was acquired for $15 million by Chicago Mercantile Exchange (CME Group) in 2006 to expand its presence in the over-the-counter interest rate swaps market[2]. The London-based Swapstream launched in 2003 for the interdealer swaps market as a neutral, multi-lateral electronic trading platform supporting trading of euro and Swiss franc denominated medium- and long-term interest rate swaps.

With CME's purchase, Swapstream adds benefits of central clearing guarantees and greater operational and processing functionality for what are considered "standardized cleared interest-rate swaps." According to CME Group, the interest rate swap market (IRS) is vaued at $271 trillion.

Swapstream's functionality allows dealers to interact with one or more banks, one or more brokers, or any combination of these to build their own marketplace and distribute their liquidity. It features a permission-based system that lets market participants publish customized prices and pricing curves based on both credit and counterparty considerations.

Platforms

Two Swapstream platforms, sDealer and sPro (sPro introduced in mid-2007) serve different user groups. The sDealer platform is primarily for banks, dealers and brokers, while sPro targets sophisticated, professional traders such as hedge funds, proprietary trading desks, and asset managers.

Swapstream with Exchange Capabilities: CME Swaps on Swapstream

SwapStream was to launch under the CME Group banner in the first quarter of 2008.[3][4] However, as of the end of the third quarter of 2008, Swapstream had not launched.[5]

Key Officials

Early "Adopters" -- Participants

In early February 2008, Swapstream/CME Group released the names of 33 buy-side participants who had committed to an Early Adopter Program (EAP) for CME Swaps on Swapstream.[6]

The new participants, who have agreed to commit resources and to work with Swapstream and CME Group to be ready to participate in the beta and launch phases, include banks, mortgage banks, asset managers, hedge funds and proprietary trading firms:

Swapstream Products

Products on sPro:

  • Outright interest rate swaps
  • Futures crossed swaps: 1- to 50-years maturities vs 3M or 6M Libor or Euribor
  • Short-term interest rate swaps: 1-month to 2-years vs EONIA and vs 1M Libor or Euribor
  • Direct and implied interest rate swap calendar and butterfly spreads on any of the above products
  • Currencies — USD, EUR and GBP, with near-term plans for other currencies


Products on sDealer:

  • Interest rate swaps
  • Futures crossed swaps: 1- to 50-years maturities vs 3M or 6M Libor or Euribor
  • Short-term interest rate swaps: 1-month to 2-years vs OIS and vs 1M Libor or Euribor
  • Direct and implied interest rate swap calendar and butterfly spreads on any of the above products
  • Currencies — USD, EUR, GBP and CHF, with near-term plans for other currencies

Getting Connected to Swapstream

To connect to either sDealer or sPro requires five steps:[7]

For sDealer

1. The firm must be a bank or an interdealer broker.
2. The firm is classified as a Market Counterparty (as defined by the FSA) and an eligible contract participant (as defined under the Commodity Exchange Act).
3. The firm must execute a Swapstream Customer Agreement and satisfy Swapstream authorisation and user registration conditions.
4. A clearing addendum involving a CME Group-recognised clearing firm for trading CME Group Swaps on Swapstream.
5. Connect to the Swapstream network through one of the following:

  • CDL (leased line architecture) - CME Group member managed solution;
  • BT Radianz (leased line architecture) – BT Radianz managed solution; or
  • Internet VPN (internet architecture) - via IPSec or SSL protocols

For sPro

1. The firm is a professional participant in the IRS trading market (e.g. bank, agency, hedge fund, proprietary trading desk, asset manager).
2. The firm is classified or agrees to be classified as a Market Counterparty (as defined by the FSA) and an eligible contract participant (as defined under the Commodity Exchange Act).
3. The firm must execute a Swapstream Customer Agreement (including prime broker and fiduciary client addendums if relevant) and satisfy Swapstream authorisation and user registration conditions.
4. A clearing addendum involving a CME-recognised clearing firm for trading CME Swaps on Swapstream.
5. Connect to the Swapstream network through one of the following means available:

  • CDL (leased line architecture) - CME member managed solution
  • BT Radianz (leased line architecture) – BT Radianz managed solution
  • Internet VPN (internet architecture) - via IPSec or SSL protocols

Swapstream Support

For technical information on the Swapstream platform:

  • E-mail -- info@swapstream.net
  • Phone (London) -- +44 (0) 20 7799 1717

Also See

References

  1. SwapStrean FAQS. CME Group.
  2. 'CME to Bring Further Efficiencies to OTC Marketplace With Acquisition of London-based Swapstream," 7/5/06. CME Group.
  3. Swapstream Overview. CME Group.
  4. "CME Swaps on Swapstream”. CME Group.
  5. GL TRADE and Swapstream enter into strategic agreement to support CME Cleared Swaps. Bobsguide.com.
  6. "Swapstream Announces 33 Participants for CME Swaps on Swapstream, the First Centrally Cleared Interest Rate Swap,” Feb. 4, 2008. CME Group.
  7. Getting Connected to the Swapstream Platforms. CME Group.