Japanese yen swaps on multilateral trading facilities (MTFs) and swap execution facilities (SEFs) can now be cleared with Japan Securities Clearing Corporation (JSCC).
The new arrangement replaces a previously time-consuming and redundant confirmation (or take-up) process between the clearing house and clearing brokers subsequent to the execution of their clients’ yen swap transactions, according to Tradeweb Markets.
Tradeweb, a Nasdaq-listed operator of electronic marketplaces for rates, credit, equities and money markets, says clients will now be able to benefit from fully automated workflows on its MTFs and SEFs – from pre-trade credit checks to execution and clearing – and achieve straight-through processing (STP) improvements.
“This is the latest example of Tradeweb and JSCC being responsive to the needs of our clients, both global hedge funds and real-money accounts, around more connectivity, flexibility and choice in yen swap trading,” says Enrico Bruni, head of Europe and Asia business at Tradeweb.
Bruni notes that yen swaps form an important part of many institutional strategies, and harmonizing these transactions with the real-time, STP nature of the other instruments in their portfolios will create significant efficiencies to the institutions that trade them.
Tradeweb facilitates both direct and indirect connectivity to clearing houses and links to middleware providers globally. JSCC provides clearing services for listed cash and derivatives, over-the-counter (OTC) derivatives, and OTC Japanese Government Bond cash and repo transactions for both domestic and foreign financial institutions.
Clearing volume of yen swaps on JSCC reached 1,181 trillion yen (US$8 trillion) as of August 2023, exceeding the previous record of 1,111 trillion yen for the entire 2022.
“I am confident that JSCC’s support of MTF and SEF trading will help our clients express their views in Japanese interest rate products much more efficiently,” says Taichi Shibuya, head of Japan at Tradeweb. “Enabling investors to hedge their JPY risk, while simultaneously enjoying the benefits of trading electronically, can only add tailwinds to their strongly growing interest in yen assets.”