Preparing for connectivity rules under Dodd-Frank, Javelin Capital Markets said its OTC derivatives execution platform has joined IPC Systems’ Connexus Financial Extranet Service to capture liquidity for participants when the new market structure takes off.
Under the Dodd-Frank Act, what has mostly been a private, negotiated market, will change into a more transparent, electronic marketplace with multiple execution venues and sources of liquidity. Based on the rules being written by the Commodity Futures Trading Commission (CFTC), firms that launch swap execution facilities or SEFs will need to establish and maintain constant connectivity in order to retain access to liquidity.
Javelin said it chose IPC’s Connexus platform to enable its customers not only comply with regulations but to also capture liquidity, achieve best execution and gain a strategic advantage in the evolving landscape for OTC derivatives.
“We are delighted that IPC is providing connectivity to a diverse pool of market participants seeking direct access to the Javelin trading platform,” said Michael Black, head of infrastructure, Javelin Capital Markets, in the release. “As the OTC derivatives markets embrace change, it is extremely important for our clients to have reliable and secure connectivity to our platform for trade execution.”
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Javelin was founded in 2009 by derivative trading and technology professionals and since then, has created a SEF, a platform for regulated trading of swaps.
However, most firms are not that prepared for new OTC regulations and SEFs, according to survey IPC conducted several weeks ago.
The survey showed that 62 percent of firms say they are or will be connected to one or more SEFs, which IPC points, demonstrates the potential for Javelin to attract participants to its platform and also to connect with the existing ecosystem of Connexus’ market participants.
Meanwhile, IPC has been developing a community of market participants in the OTC derivatives market, that includes broker –dealers, inter-dealer brokers, derivative execution venues and major institutional investors.
““As the market structure for OTC derivatives continues to evolve, IPC is providing its customers with solutions that help their clients seize alpha generation opportunities,” commented Joe Pickel, vice president, Network Services Product Management, IPC, in the release. “As electronic trading in interest rate and credit default swaps flourishes having Javelin Capital Markets as a liquidity venue destination on Connexus will provide market participants with the flexibility required to trade these rapidly growing asset classes.”