CME Swaps on Swapstream combines unparalleled direct, anonymous access to high-volume customer groups through Swapstream's platforms, with the regulatory protection and risk management previously only available with exchange-traded products. The product will include forward-dated interest rate swaps denominated in U.S. dollars and Euros with maturities out to 30 years, as well as short-term overnight index (OIS) swaps ending on monthly International Monetary Market (IMM) start dates. Their fixed coupons will be reset at the end of every day and positions will be marked to market daily.
"CME Swaps on Swapstream brings the benefits of central counterparty clearing, such as position netting and risk offsets, to the $207 trillion interest rate swaps market," said Robin Ross, Managing Director, CME Group Interest Rate Products. "Combining the strengths of CME Clearing360 services and Swapstream's cutting edge trading technology is part of CME Group's broader strategy of providing greater operational and cost efficiencies to trading vanilla over-the-counter products."
"Together CME Group and Swapstream are providing a revolutionary OTC solution that meets the needs of swaps traders and other market participants, such as hedge funds," said Stephane Rio, CEO, Swapstream. "For the first time users of plain vanilla and forward swaps will have the opportunity to trade standardized, centrally-cleared interest rate swaps on a multilateral, neutral electronic platform."
The new product will offer the balance sheet and operational efficiencies of central counterparty clearing and straight through processing to the interest rate swap market. In particular, benefits of CME Swaps on Swapstream include:
-- Automatic netting of offsettable positions -- Operational simplicity through provision of the daily Swap Value Factor and use of standard FIXML -- The use of SPAN (Standards Portfolio Analysis of Risk), a methodology developed by CME in 1988 for calculating performance bond requirements, provides simple and appropriate provisioning of risk offset -- Favorable capital treatment through marking the swaps to market daily and banking these amounts
For more information on CME Swaps on Swapstream please visit http://www.cme.com/swaps or http://www.swapstream.com to learn more about connecting to Swapstream.