Tradeweb announces first electronic SOFR swaption trade for OTC market hedging

Rick Steves

Tradeweb has been enhancing the derivatives trading space with the electrification of swaps and swaptions products, including swap compression trades, two-way market swap; swaption trade; cleared inflation swap; multi-asset package trade; cross-currency swap; European invoice spread trade; and SOFR swap spread trade.

Tradeweb

Tradeweb Markets Inc. has completed its first fully electronic institutional Secured Overnight Financing Rate (SOFR) swaption trade, with Goldman Sachs and Québec’s CDPQ acting as counterparties on the trade executed on the Tradeweb Swap Execution Facility (TW SEF).

Since the completion of the inaugural trade, 15 dealers are now providing swaptions pricing on TW SEF, said Tradeweb, the operator of electronic marketplaces for rates, credit, equities and money markets.

Growing segment of the interest rates derivatives market

Anshul Sehgal, Co-Head of U.S. Interest Rate Products Trading at Goldman Sachs, said: “We are pleased to have completed the first street-wide electronic SOFR swaption trade. We are focused on meeting our clients’ needs while being at the forefront of technological developments in the U.S. rates market, including supporting the market’s transition to SOFR.”

Colm Murtagh, Head of U.S. Institutional Rates at Tradeweb, said: “Facilitating SOFR swaptions trading is yet another meaningful step forward in the electronification of markets, demonstrating how non-linear swaps can also benefit from electronic execution and access to deeper pools of liquidity.”

A swaption (also known as a swap option) trade allows participants the ability to opt into an interest rate swap contract. Swaptions provide traders with optionality and control as they transact and hedge in the OTC market. Swaption trades represent an important and growing segment of the interest rates derivatives market.

Tradeweb has been enhancing the derivatives trading space with the electrification of swaps and swaptions products, including swap compression trades, two-way market swap; swaption trade; cleared inflation swap; multi-asset package trade; cross-currency swap; European invoice spread trade; and SOFR swap spread trade.

Tradeweb introduced SOFT swaptions trading on the TW SEF platform to allow market participants a more efficient way to access market rates liquidity in SOFR following the global transition from LIBOR to SOFR at the end of 2021.

Swaptions traders can leverage the Tradeweb platform with the request-for-quote (RFQ) tool to put multiple liquidity providers in competition, and request-for-market (RFM) functionality to access two-way markets.

Tradeweb provides access to markets, data and analytics, electronic trading, STP and reporting for more than 40 products to clients in the institutional, wholesale and retail markets.

The firm develops ways to enhance price discovery, order execution and trade workflows, having facilitated more than $1 trillion in notional value traded per day over the past four quarters.

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