TeraExchange to Launch Order Book for Swaps
October 28, 2011
TeraExchange, a new swaps trading venture, says that it will launch one of the world's first central limit order books for swaps in the fourth quarter of 2011.
"Legacy platforms won't work in this transforming market landscape and new world being created", says Christian Martin, chief executive and co-founder of TeraExchange in a statement. "Our agile, transparent multi-asset trading solution can be shaped to accommodate a near limitless number of objectives and strategies."
Martin says that users will benefit from fluid pricing analytics, cross-asset trading, strong risk controls and voice-broker assistance. Among the contracts to be traded are interest rate swaps, credit default swaps, energy swaps, non-deliverable forwards and equity swaps. ]
According to TeraExchange's website, the trades will be cleared through "all OTC clearinghouses" including units owned by CME Group, Intercontinental Exchange, LCH.Clearnet and the International Derivatives Clearing Group and they will be reported to trade repositories.
Registered as an Exempt Board of Trade (EBOT) for swaps and other over-the-counter cleared derivatives, TeraExchange says it will apply to become a swaps execution facility (SEF) once the Securities and Exchange Commission and Commodity Futures Trading Commission finalize their rules for SEFs in early 2012.
SEFs is the term used by regulators to refer to authorized electronic trading venues for swap contracts. The Dodd-Frank Wall Street Reform Act and its European counterpart called the European Market Infrastructure Regulation, require swap contracts to be traded on electronic platforms and cleared through central clearinghouses.
An exempt board of trade is a trading facilities that trades commodities other than securities or securities indexes and either no cash market or a cash market so liquid that it is unlikely that any contract traded can be subject to price manipulation.
TeraExchange says it is a service of Spring Trading, Inc. which has offices in Summit, NJ and Washington, DC, and a subsidiary in Germany. The firm says it plans to expand in other locations shortly.
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