The Royal Bank of Scotland has booked the first interest rate swap give-up trades on SwapsWireâs PBWire platform, acting as prime broker for a large Connecticut-based hedge fund. Bank of America acted as executing broker. In a give-up trade, a client executes a transaction at a price supplied by an executing broker, but then faces their prime broker as counterparty. The prime broker mirrors the transaction with the executing broker as counterparty, effectively intermediating between the two.
Michelle Wong, Global Head of Prime Brokerage at the Royal Bank of Scotland commented âRBS Prime Brokerage is thrilled to be at the forefront of the new Rates Prime Brokerage market. Clients are sure to benefit from our ability to offer liquidity and credit quality with the operational efficiency and ease of use offered by our fully automated Prime Brokerage service.â
RBS Prime Brokerage has integrated PBWire into its internal systems such that give-up trades entered by executing brokers are automatically matched and confirmed without the need for manual intervention. Completing the give-up process on PBWire, which is often within only a few minutes, also completes the documentation process entirely automatically. There is no need for a separate set of confirmation documents to be drafted, exchanged and matched.
The hedge fund representative stated, âWe performed a thorough, year long study into our options with prime brokering our OTC rate products. We determined that the combination of RBS Prime Brokerage and SwapsWire gave us what we desired in terms of full automation, which we believe will significantly reduce the possibility of operational and trading risk in the OTC space. In addition, it will allow our traders and operations personnel to spend their time on more value-added activities to the business. We will now be able to fully tie-out trades and positions of our OTC book on trade date.â
Craig Lindemann, Head of Securities/Product Sales at Bank of America said âWe work very hard to deliver the best execution solutions to our trading clients and are delighted that we were able to facilitate these tradesâ
PBWire features are automatically available to all existing SwapsWire users. There are currently twenty-seven leading dealers using SwapsWire. Seven prime brokers have committed to using SwapsWire for OTC give-ups, making it the de-facto standard in the market. Executing brokers will benefit from being able to use a single platform regardless of which prime broker a given trade is being given up to. PBWireâs real-time process and combination of trade booking and confirmation is a significant advance in operational efficiency for the market.
Chip Carver, SwapsWireâs CEO added âSwapsWire has continually taken an innovative and revolutionary approach to helping the OTC market manage its rapid growth. This approach to handling give-ups quickly and efficiently required considerable investment, and the results will now start to show as everyone involved is freed to focus on execution without worrying about operational issues.â
SwapsWire supports automated booking and confirmation for sell-side and buy-side clients globally across multiple asset classes. The number of buy-side clients signed up to use the system has doubled in the last three months. In addition, more than thirty inter-dealer brokers are now connected to the system, as well as a number of electronic execution platforms. Product support includes interest rate swaps and options, FRAâs and overnight index swaps, equity options, and credit default and index swaps. The volume of transactions confirmed on SwapsWire hit an all-time high in January, with 99.9% of deals between dealers confirmed on trade date, an unprecedented achievement when compared to the paper process, or other service providers.