Six major banks have signed up to ICAP PLC-owned (>> ICAP plc) Traiana's clearing network, helping it to steal a march on its rivals as the foreign-exchange industry prepares for a long-awaited overhaul of regulations governing derivatives trading.
Citigroup Inc. (>> Citigroup Inc.), Bank of America Merrill Lynch (>> Bank of America Corp), Deutsche Bank AG (DB), JP Morgan Chase & Co. (>> JPMorgan Chase & Co.), Morgan Stanley (MS) and UBS AG (UBS) have signed up to the service, known as Harmony CCP Connect, Traiana said Monday.
Traiana, which provides port-trade services like credit checks and financial messaging, and helps to connect banks with trading exchanges, said Harmony CCP Connect made the clearing process simpler by providing a direct line to the clearer.
"Traiana has the connections in place to the clearing houses, clients and counterparties . . . [and] ties into our existing FX systems and processes," Andrew Coyne, head of FX prime and e-commerce product at Citigroup, said in a release.
Clearing houses LCH.Clearnet Group Ltd., IntercontinentalExchange Inc. (>> IntercontinentalExchange, Inc.), CME group Inc. (>> CME Group Inc.) and Singapore Exchange Ltd. (S68.SG) are among those to have said they will use Harmony CCP Connect.
Announced last year, Harmony CCP Connect offers trade routing, affirmation, matching, allocation and reporting for centrally cleared foreign-exchange options and non-deliverable forwards, between institutions and clearing houses, as required by the U.S. Dodd Frank Act and the European Union's European Markets Infrastructure Regulation.
Central counterparties have been written into the regulation to reduce the counterparty, systemic and credit risks associated with over-the-counter derivatives trading, in line with long-standing pledges by the Group of 20 industrialized and developing economies to bring greater stability to financial markets by the end of 2012.
Traiana's service isn't unique to the market--other providers such as Tullett Prebon PLC (>> Tullett Prebon Plc) and GFI Group Inc. (>> GFI Group Inc.) are expected to launch similar services in the coming months.
-By Alexandra Fletcher, Dow Jones Newswires; 44 20 7842 9462; [email protected] @djfxtrader