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Surge in institutinal electronic trading reported by Tradeweb

Date: Friday, May 14, 2010
Author: Hedge Funds Review

Institutional trading of interest swaps on online market provider Tradeweb's multi-dealer to client marketplace increased by over 71% in the first four months of 2010 compared to the same period in 2009.

Average daily trading volume interest rate swaps exceed $4 billion over the period, said Tradeweb.

There were 1,600 trades in April 2010, an increase of 189% over April 2009 and 38% up from March 2010.

This growth in electronic trading coincides with demands from global legislators for trading of over the counter (OTC) on regulated execution venues or swap execution facilities (SEFs).

Calls for reform are being heard in the US where the principles for becoming an SEF are set out in  legislation being debated in Congress.

The principles include pre- and post-trade price transparency, efficient trade execution and processing, digital records of all trades and trade inquiries and a permanent audit trail.

If the legislation passes, Tradeweb will register as an SEF.

“There is now a clear and unambiguous shift towards the electronic trading of OTC derivatives," noted Lee Olesky, CEO of Tradeweb.

"Electronic trading is here today and is providing the benefits and safeguards that are being sought by global regulators. Legislative reform will undoubtedly accelerate this trend towards greater efficiency and transparency, but the initial vote for change is coming from the market,” added Olesky.