Bloomberg’s swap execution facility, Bloomberg SEF, launched a List trading tool for Interest Rate Swaps (IRS), which enables market participants to create and a basket of swaps that can be traded at a single price using Bloomberg SEF’s request for quote (RFQ) functionality.
The List tool allows for multiple swaps to be transacted at a single time, so customers who are looking to execute multiple swaps -- up to 40 swaps -- at a time can be transacted.
“Oftentimes, that will be done in unwinds of existing positions,” George Harrington, global head of fixed income, FX and commodity trading at Bloomberg, told Markets Media. “The term 'compression' is used a lot and certainly it can be used to compress existing positions, but it can also be used to open multiple new positions as well.”
The List tool allows clients to offset cleared risk, which reduces the number of existing trades and overall capital costs, the company said.
“We use the full integrated SEF workflow for the List tool, so we do have pre-trade credit checking for all the individual items,” Harrington said. “When the trade is completed, we'll submit it directly to the clearing house, and you can receive your clearing statuses back. It's fully integrated into the Bloomberg workflow solution.”
Asset manager NISA Investment Advisors, LLC (NISA), supported by futures commission merchant Morgan Stanley, executed the first package trade using Bloomberg’s List tool. Four financial institutions -- BofA Merrill Lynch, Citigroup, J.P. Morgan and Wells Fargo --responded with a price. Since then, more than $1 billion in transactions have been completed on Bloomberg SEF using the List tool.
“Bloomberg has been a valued partner in SEF trading and we will continue to work together to build technological tools that enable NISA to access as much liquidity as possible for our clients,” said Ken Lester, NISA’s managing director of portfolio management, in a release.
Packaged trades in the form of curve trades or in the form of butterfly trades are more often done directly on SEF, “however you certainly could create the same thing as a curve or a butterfly using the List tool,” Harrington said.
Bloomberg has had eight trillion dollars in total transaction volume since we launched our SEF, and 950 accounts are currently on the platform.
“This List tool fills a gap in our offering that we didn't previously have and that our customers were seeking to do,” said Harrington We feel like we're in a very good position and we've been happy with how we've done, so it's been a pretty great first year.”