Bloomberg, banks build 'vanilla swaps' trading system

Financial information and media company Bloomberg and several major banks are forming a new e-trading company.

ABN Amro, Barclays Capital, HSBC and JP Morgan will be part of a consortium which will operate a 'vanilla swaps' trading platform in interest rate and derivatives products.

The term 'vanilla swaps' means a like-for-like swap. The value of the swap is the difference between the interest rates on a fixed amount of money. It is one of the last areas in wholesale banking that still largely relies on telephones for communication.

Russel Levi of Bloomberg, said in a statement: "The increasing usage of derivatives among institutional asset managers is driving the demand for a well distributed multi-bank platform to provide best execution and offer straight-through processing."

Bloomberg is thought to be contributing to the project with its SwapTrader platform, which offers swaps in dollars and euros.