NEWS UPDATE
DERIVATIVES
Tullett Prebon to pay $13 million for
swaps trading desk compliance failures
I
nterdealer broker Tullett Prebon has been fined $13 million
by the US derivatives watchdog for failing to supervise
its interest rate swaps trading desk, which made false
statements on transactions to clients.
The US Commodities Futures Trading Commission (CFTC)
said that Tullett Prebon has been issued with two orders
filing and settling charges against its Americas business
division. Tullett Prebon has been fined $11 million as part of
the first order related to supervision failures, and $2 million
as part of the second, to do with making false statements.
In the orders, the CFTC stated that Tullett Prebon failed
to implement supervisory procedures to prevent its voice
brokers on the swaps desk from making false or mislead-
ing statements to clients related to certain trades, bids
and offers in US dollar medium term interest rate swaps.
Tullett Prebon failed to take corrective action when the
voice-broking misconduct was brought to its manage-
ment’s attention, and allowed it to continue, according to
the order.
“The CFTC is devoted to ensuring price transparency and
competition in all markets, whether electronically traded
futures contracts or voice-brokered swaps,” said CFTC
director of enforcement, James McDonald. “As important,
the CFTC is committed to ensuring that its investigations
and fact gathering processes are not obstructed by false or
misleading information.”
As part of the order, Tullett Prebon is now required to
implement certain measures on the interest rate swaps
trading desk, including direct supervision, new software to
monitor trades brokered by the desk, publishing internal
guidelines, and ensuring clients understand the practices
of the voice-brokering business.
TECHNOLOGY
JP Morgan and Societe Generale invest in FinTech
aiming to transform voice-traded markets
A
start-up that provides matching and negotiation
systems to banks has attracted investment from JP
Morgan and Societe Generale, as it seeks to transform
markets that are traditionally voice-traded.
Wematch provides a dealer-to-dealer platform to clients
through web technologies in a bid to improve the matching
and negotiation trading process. It aims to bring the audit
and control benefits of electronic trading to voice-traded
markets via a web-based software-as-a-service.
“Wematch is delivering the next generation in trading
protocols, with intuitive GUIs and workflow tools to give
voice trading professionals the edge. Everything we build is
designed to support the trader’s decision, giving them the
tools to make the right call with confidence and certainty,”
said Gregory Mimoun, co-CEO of Wematch.
The company also pointed to substantial potential to
help the industry further adopt digital solutions across
global markets, as regulatory developments force trades to
be conducted on electronic trading venues. More than 80%
of structured products and FX derivatives are still transact-
ed by voice, and 70% of the interest rate swaps market is
also still negotiated over the phone.
Last year the firm was enrolled in JP Morgan’s in-resi-
dence FinTech programme and it was also part of the So-
ciete Generale global markets incubator. Both investment
banks are now active on all of Wematch’s platforms.
“JP Morgan was an early supporter of WeMatch,”
Pasquale Cataldi, head of markets lab at JP Morgan, com-
mented. “As a member of our InResidence Programme, the
platform showed real potential to transform the interbank
interest rate dealing market through automation, resulting
in audit and control benefits. The level of market adop-
tion has already been encouraging and we’re delighted to
continue the journey with them.”
More than 40 banks and 750 traders currently cross
assets on Wematch using its technology and platform.
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