Brokers May Account For A Third Of New Swaps Trade Venues (Dow Jones)

By | November 1, 2010

Dow Jones coverage of my latest research report “The Future of OTC Derivatives: Swap Execution Facilities and the New Dealer”.  Within the report I breakdown not just the open questions surrounding the definition of swap execution facility but also who will be behind these new venues.  Unfortunately this story is not publicly available online (only via Dow Jones Newswire) and I can’t put the whole thing here of course (copyrights and all), but here’s a summary:

NEW YORK (Dow Jones)–Brokers of customized derivatives between dealers could
account for nearly one-third of those firms planning to register as swap-trading
venues once the regulatory overhaul of the derivatives market goes into effect
next year, according to a new report by TABB Group.

That’s almost as many as exchanges. According to the report, so-called
interdealer brokers will account for 28% of the new swap-execution facilities,
exchanges could account for 33%, existing trading platforms that primarily focus
on customer-to-dealer trades could account for 17%, and 21% could be start-ups.

The market share each type of provider might win is still unclear, but
interdealer brokers will likely retain the lion’s share because they already
handle the majority of swaps traded, TABB believes.

If you have access to Dow Jones Newswire please check out the rest of the story.

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