28 Mar 03: Interdealer Broker Tullett Joins XML-Based Swapswire Utility
Tullett plc, a major interdealer broker, has joined the industry-backed electronic platform SwapsWire to provide its interest rate derivatives clients with straight-through-processing (STP).
SwapsWire, a consortium of 23 leading derivatives dealers, provides a network that allows brokers and dealers to confirm deals in real time between each other electronically. Swap deals arranged by Tullett will be legally confirmed between banks connected to the SwapsWire network, removing the manual trade reconciliation process.
“We are very pleased to be able to offer our clients the STP benefits that the SwapsWire network achieves” said Mark Perkins, Tullett’s President of North America. “Being able to transfer information immediately after the trade has been completed will reduce processing costs and opportunities for operational errors.”
Chip Carver, CEO of SwapsWire commented “After a successful launch, SwapsWire is becoming widely accepted as the best way to confirm OTC derivative transactions. We are excited about Tullett’s participation – their involvement means that the majority of interest rate swaps dealt through interdealer brokers can now be confirmed on SwapsWire.”
The SwapsWire system, which has been operating since October 2002, supports OTC derivatives in eight currencies (Euro, Sterling, Japanese yen, U.S. dollar, Swiss franc, Norwegian kroner, Swedish kronor, Danish kroner). The system is being used at 28 sites in Europe and the U.S. Over $1 trillion notional value has been booked using SwapsWire to date.
SwapsWire is backed by a consortium of 23 leading derivatives dealers: Bank of America, Bank of Tokyo-Mitsubishi, Barclays Bank, Bayerische Hypo-& Vereinsbank, BNP Paribas, Citigroup, CDC Ixis Capital Markets, Credit Agricole Indosuez, Credit Lyonnais, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, HSBC Bank, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Mizuho Capital Markets, Morgan Stanley, Royal Bank of Scotland, Societe Generale, Sumitomo Mitsui Banking Corp., UBS Warburg, and UFJ Bank Ltd.
The system uses XML – specifically the FpML schema for financial products – to help automate the trading and confirmation process in the hopes of reducing errors for participants. By providing a way to reduce transaction errors through automation, SwapsWire’s backers believe the system can help participating banks and brokers substantially reduce their operating costs in this area.
SwapsWire uses FpML to communicate trade details to participating banks and brokers through an application programming interface (API). Front-office staff use an application to confirm transaction details onscreen. After confirmation, the data is made available through the API, so that the bank’s internal systems can be updated immediately.
When a trade is executed through participating brokers, usually by telephone, the broker sends the trade data to SwapsWire in FpML format. The data is then presented to the banks onscreen, allowing them to review and agree the details.