Tradition takes home its second award for its Swap Execution Facility, which was praised by one judge for setting itself apart from the pack in its “true adherence to the spirit of Dodd-Frank”.
According to Scott Fitzpatrick, CEO of TraditionSEF, this has been at the heart of the build out over the past two years.
“Considering the scope of products across asset classes affected by the implementation of the Dodd-Frank Act, the attention to detail around how the core principles of the regulation have been implemented cannot be underestimated,” he says. “It has been at the centre of how we have built the platform and set up our business.”
Tradition overhauled its internal operations when it launched its SEF in 2013. It took the view that the business had to fit around the SEF rather than the other way around and restructured its business to accommodate the launch.
The result is a SEF that has a depth of liquidity far greater than any of its competitors in dollar swaps (widely considered as the CFTC’s flagship product for future market structure) with prices streamed across the curve throughout the day from multiple contributors.
Unlike some of its competitors which run their voice broking business alongside, but separate to the central order book, Tradition operates a single order book model channelling all voice bids and offers through its SEF meaning that clients get a single source reflecting all of the available liquidity.
Underpinning that liquidity is market leading technology which gives the SEF capacity to handle between 8 and 10m incoming orders per day and through implied pricing generates upward of 1 billion tradeable orders.
Tradition’s innovative approach to the new regulatory landscape has enabled it to build around a 30% market share versus its peers in vanilla dollar swaps and to move into other markets such as the basis spread between LCH and CME Clearing, which has been one of the defining factors of change in the market this year, and it which it has captured around a 60% marketshare.
“The strength and depth of the liquidity we have been able to attract has given us the opportunity to take the lead in new markets and build a strong position in those markets,” says Fitzpatrick.
