Derivatives houses are encouraging their buyside counterparties to join market matching and confirmation systems the Depository Trust & Clearing Corp. and SwapsWire have developed, with penalties looming for participants that delay automating.
Some market participants are predicting banks may opt to deal solely with counterparties that use the systems or charge the manual players more money to transact business. "At some point it will be more expensive, risky and cumbersome to deal with a counterparty not using a market utility," said an industry official. "Pricing differentiation already exists and is based on multiple factors. Soon the way a trade is booked and confirmed will be a key pricing differentiating factor," one official said.
