With the Dodd-Frank reforms expected to mandate electronic trading in plain vanilla swaps, trueEX, LLC, an execution platform for trading global interest rate swaps, said it struck a clearing agreement with CME Clearing.
According to the company, trueEX provides execution and processing services as a CFTC-regulated designated contract market or DCM for the global IRS market.
The company said trueEX worked closely with CME Clearing to complete testing and certification to provide the global IRS market with this regulated, scalable and automated platform for execution and clearing services.
The Dodd-Frank Act passed in the United States last year mandated execution and clearing of standardized OTC derivatives. It is expected that a large percentage of derivatives transactions will be executed on regulated exchanges and cleared through central clearinghouses.
trueEX will provide transparency, standardization and automation for market participants to execute interest-rate swaps and related products in a CFTC-regulated platform, according to the release. In addition to regulatory oversight and straight through processing, CME's risk management technology will enable clearing.
"CME Group has worked to provide the market with immediate clearing certainty. CME Clearing accepts trades in sub-second time, allowing clients to achieve real-time execution and clearing. When our execution is combined with CME Clearing's technology, the market can greatly benefit from Dodd-Frank's core principles being met," stated Sunil Hirani, CEO of trueEX, who co-founded the firm with Jim Miller. Hirani also founded Creditex, the first electronic trading platform for credit default swaps (CDS), which was sold to ICE in 2008. He and members of the trueEX management team also launched T-Zero (now ICE Link).
"Trading on automated platforms, combined with central clearing, will provide much needed execution and capital efficiencies with the demand for regulatory oversight," continued Hirani. "By connecting with CME Clearing we will provide market participants the ability to trade electronically and clear instantaneously through the most diversified derivatives clearinghouse, while delivering significant capital benefits. This is a significant value proposition for the marketplace."
According to Michael O'Connell, managing director of clearing services at CME Group, "CME Clearing continues to work closely with buy-side and sell-side participants, as well as execution platforms such as trueEX, to help all market participants adapt to the new environment," said O'Connell in a prepared statement.