Fenics Market Data Launches “Unique” Aussie IRD Service
Posted by Colin Lambert. Last updated: August 24, 2023
BGC’s Fenics Market Data has announced the launch of what it terms a “new and unique data service” for Australian dollar interest rate swaps (IRS). The firm says the service, based upon executable data, will bring greater transparency to the market and help reduce the risk of mispricing.
Working with market participants, Fenics Market Data says it has created what it now the only composite screen available for AUD IRS, compiled from live, executable inputs from multiple market participants. The service was launched with over 50% of the market contributing, and that percentage is expected to increase to more than 80% in the coming weeks.
The firm observes that traditionally markets have relied on single inter-dealer broker (IDB) reference pages, which are only a sub-section of the market, and not reflective of the broader view. Several IDBs produce a data page or screen for the AUD IRS market, but Fenics points out these are indicative data prices themselves are not tradeable, as the illiquid tenors are calculated by models. “Since these pages only reflect an individual IDB’s view on the market, this naturally heightens the chances of mispricing that regulators are keen to prevent,” the firm states.
“Transactions such as interest rate swaps, that are priced using a narrow, single venue price reference source, are under scrutiny from regulators concerned at mispricing for end user clients,” observes Dr. Keith Nicolle, product strategist at Fenics Market Data. “The onus is on industry players to ensure that their price referencing sources are reflective of the whole market and not a singular view.”
Rich Winter, global head, Fenics Market Data and Kace Information Analytics, adds, “This is a transformative new service. By working together with market participants, we are helping our clients meet their regulatory needs. The power of harnessing extensive market contributions offers traders, risk and compliance officers, and managers alike, reassurance that the referencing source used by them for client trades is the broadest and most accurate reflection of real, observed prices in the market.”
The move has also been welcomed by Nicholas Allen, head of AUD Rates trading at Westpac, who says, “The Fenics Market Data team have worked collaboratively with the industry to produce the aggregated AUD IRS page, made solely of executable prices. This page is a leap forward on current practice for compliant and independent price validation.”