Indication of Interest
Traders can raise an Indication of Interest ("IoI") which will be broadcasted to all subscribers and simultaneously will establish a spontaneous central limit order book instance for the balance of the trading day. The dynamic instrument created by the IoI becomes a permanent part of SwapEx’s supported instrument list and is subject to the recordkeeping requirements of the SEF.
Any interested subscriber can receive an Indication of Interest, and decide whether to add liquidity in response to the request or, conversely, take liquidity as other subscribers react to the IoI. It presents the most efficient way for traders to access all available sources of liquidity for instruments that aren’t readily supported in the main.
The Indication of Interest also allows traders to find counterparties willing to provide a Net Present Value (NPV) to facilitate the tear-up of an aged interest rate swap instrument as an individual line-item unwind.
Liquidity providers are afforded a comprehensive set of tools to be able to dynamically respond to indications of interest. Liquidity providers will be able to connect their pricing models to automatically respond to structured IoIs as they are created by the initiators.