Two electronic money market derivatives brokers, iFOX and atenX, are due to merge today. The combined company, called ATFox, will broker standardized interest-rate derivatives, such as European Overnight Index Average (EONIA) swaps, according to Jack Parrish, ceo of the combined company.
ATFox will be a better brokering platform because the increased number and diversity of participants on one site will boost liquidity, according to Pablo Vergara, head of global short term interest rate products at Rabobank in Utrecht, Netherlands, who is a user of both of the former brokers. Parrish said iFOX was stronger in Germany, Scandinavia and the U.K., whereas atenX is dominant in France and the Netherlands.
The company is part owned by the interest-rate derivatives broker HPC and Parrish said its customers will be able to use HPC's voicebrokers to ensure they get the best price whether it is through the electronic system or over the phone.
Parrish said ATFox is concentrating on the overnight market because it is has the least credit risk, and the most liquidity and standardized products. This makes it more suitable for electronic brokering than medium and long-dated swaps. Online brokers account for up to 5% of the EONIA market, according to Parrish.
