I’ve written quite a bit about the fate of single dealer portals (SDP) and SEF aggregation. UBS has finally come forward with what its been working on lately, which involves both its SDP and SEF aggregation. Having seen the demo I can assure you that what they have is real and I believe gives us a small view into the post Dodd-Frank world of swaps trading. Clients can trade with each other (which is big in and of itself) and as SEFs come online (and officially becomes SEFs…eventually) the platform will provide access to the best prices at each venue. But for all dealers this kind of technology is only one piece of the puzzle.
“Dealers are not sure which parts of the business will make the most money postreform–whether execution, clearing or financing–so they’re bundling them all together to see what sticks,” said Kevin McPartland, principal at independent research firm TABB Group.
Each element of the offering needs to work together flawlessly to ensure profitability. As to who is best poised to do that – I’ll leave that question to the buy side firms I’m in the midst of speaking to for my upcoming buy side swaps trading report.