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Foreign Exchange

ICAP claims first e-trade of interdealer non-deliverable swap

ICAP has completed what is says is the first electronic non-deliverable FX swap trade on an independent global interdealer platform.

The trade, conducted between two large market participants based in Asia, was posted on ICAP’s EBS electronic platform.

The trade followed ICAP’s launch of electronically tradeable non-deliverable FX swaps on Asian and Latin American currencies. The introduction of non-deliverable swaps on the platform will offer the first trading of two fixing swaps against one month, ICAP says.

“This is an important product for the daily life of a non-deliverable forward trader,” says Anna Didier, head of growth markets, product and business development, at ICAP Electronic Broking. “Because it’s a swap, there is no embedded spot risk, so it’s easily tradeable electronically.”

A non-deliverable overnight swap allows traders to roll over NDFs, used where one side of a currency transaction cannot be converted in the spot market.

According to NDF traders who spoke to EuromoneyFXNews, other brokers have offered similar products. BGC began offering NDF swap pricing on its platform in 2010, but has had little take-up, the traders say. GFI has also tried a similar offering.

New regulations, which will see NDF trading move onto swap execution facilities and through clearing houses in 2012, are the main reason that brokers are trying to float an electronic solution for what has previously been a voice-executed product.

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