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Capital Markets

Electronic trading: MarketAxess plans new EM service

Online trading platform MarketAxess plans to launch a client to multi-dealer emerging markets CDS index trading system in the second quarter. The system will be the first of its kind and Latin America-related business is likely to be prominent.

Emerging markets credit derivatives are attracting tremendous interest, according to Dennis Rodrigues, emerging markets product manager at MarketAxess. “The latest market intelligence we have is that emerging markets CDS index and single-name CDS trading volumes are at about the same level as cash,” he says.

Daily emerging markets trading volumes in the cash market are between $3 billion and $4 billion including both dealer-to-dealer and client-to-dealer business. Volumes in emerging markets CDS trading “have increased significantly over the past few months,” says Rodrigues, to reach a similar level.

There are several reasons for the growth, he adds. Investors want to hedge their exposure. Also real money accounts are becoming more comfortable in trading credit derivatives. “There is greater breadth and depth in the product,” he says.

MarketAxess’s emerging markets CDX trading system will build on the platform already in place for US and European high-grade corporate credit derivatives. The company also has a trading platform for these asset classes in the cash market.

MarketAxess was formed in 2000 to provide investors with a single trading platform with easy access to multi-dealer research, new issues and competitive pricing. It has 25 broker-dealer clients (17 in the emerging markets) and more than 650 institutional investors.

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