Traiana expands SEF credit checking features on CreditLink
Traiana aims to make SEF pre-trade credit checks more efficient
Pre-trade risk and post-trade processing specialist Traiana has launched a new version of its CreditLink tool for credit derivatives, which it says will help buy-side firms to trade on swap execution facilities.
Under US regulations set by the Commodity Futures Trading Commission, a clearing member must define limits and carry out pre-trade credit checks on clients’ orders before execution on SEFs can begin. CreditLink is a pre-trade credit checking platform for electronic credit default swap and interest rate swaps. It has been active since mandatory SEF trading was introduced in February, and reports that 6,050 buy-side clients have used its platform.
The swap execution facility is the new category of trading venue created in the US by the Dodd-Frank act, which seeks to standardise OTC derivatives and ensure they are traded on centrally cleared trading venues. The new abilities on CreditLink include services to streamline the post-trade processing of SEF trades, manage the allocations process for bunched orders and efforts to improve the ability to monitor limits throughout the trade.
Traiana has said that the new release was largely motivated by the new processes that are required of the buy-side for executing, clearing and allocating swaps. On the new version of CreditLink, real time notifications of SEF orders and executions have been added, ‘what-if’ checking for new trades and allocations has been implemented, bunched order allocations have been linked to clearing houses for interest rate swaps and credit default swaps, and automated notifications, alerts and reports have been added to help firms manage their margin requirements and limits with their future commissions merchants.
“Buy-side market participants trading on SEFs have pre- and post-trade requirements that impact not only their trading teams, but also their compliance and risk management processes,” said Nick Solinger, Traiana head of product strategy and chief marketing officer. “Extending our services to the buy-side provides greater visibility and flexibility, which supports the ongoing development of a smoothly functioning market in a new regulatory environment.”
SEFs are becoming increasingly established as a form of trading venue. Earlier this month, ICAP launched a swap execution facility in the UK, as part of a push to dominate both the European and the US OTC derivatives markets as they are brought under new regulation.
The new London-based ICAP SEF is registered with both the CFTC, and the UK’s Financial Conduct Authority. Unusually, it is classified both as a SEF – a US designation – as well as an MTF, the European version, allowing it to take advantage of both US and European liquidity.
