LONDON, June 14 The London Stock Exchange Group
is to launch an interest rate swaps trading platform in
a move backed by a group of banks to meet regulators' demands
for greater transparency in the once secretive but huge market
for such financial derivatives.
The LSE said its MTS Europe bond trading platform will offer
institutional investors the ability to trade interest rate swaps
from the fourth quarter.
The exchange said that BNP Paribas, Commerzbank, Credit
Agricole, HSBC, Lloyds, Societe Generale and UBS have indicated
they will support the platform from launch.
"Regulation continues to push the fixed income markets
towards more centralised, transparent, electronic market
models," Paul Hamil, managing director fixed income trading at
UBS, said in a statement announcing the new venture on Friday.
Interest rate swaps comprise the biggest chunk of the
world's $633 trillion off-exchange derivatives market which has
traditionally been traded privately among banks.
The financial crisis, where opaque swaps created
uncertainties in the market, prompted world leaders in 2009 to
call for new rules to push trading onto electronic platforms and
for contracts to be cleared by a third party.
Trades on MTS Swaps will be cleared on LCH.Clearnet, one of
the world's biggest clearing houses for interest rate swaps and
in which the LSE has recently acquired a controlling stake.
Exchanges like CME, ICE, Eurex,
NYSE Euronext and Nasdaq are expanding into
derivatives in the hope of generating income from the tigher
rules on customers and mitigate weaker share trading.