Knight Unveils NetDelta Settlement Platform for Credit Derivatives
Knight Capital Group is introducing a settlement platform for the credit derivatives market in a move to solve the problems of counterparty risk that plague the $55 trillion market. The financial services firm plans to announce the news today.
The platform known as NetDelta is focused on the back-office and will not attempt to force trading onto an exchange, according to Steve Sadoff, chief information office at Knight Capital Group and head of the NetDelta operating business. NetDelta LLC is a subsidiary of Knight Capital Group and is based in the firm’s Jersey City, New Jersey headquarters.
“The idea is that after the trade gets done, you send a feed to NetDelta or worst case, upload a spreadsheet of your trades and we would compress balance sheet utilization and compress counterparty risk,” explained Sadoff in an interview yesterday. The CIO said the benefits that NetDelta achieves seem to be in line with the problems that regulators and industry bodies like the Operations Management Group and the President’s Working Group are looking to solve. In fact, Knight has had conversations with senior people at the Federal Reserve and staff of the Senate Banking Committee and the House Finance Subcommittee. “There is definitely a lack of automation and infrastructure in the CDS market,” said Sadoff.
Meanwhile, Knight’s entry into the credit derivatives industry occurs at a time when the number of proposals to develop a central counterparty clearinghouse for CDS trades is proliferating. Last week, InterContinental Exchange (ICE) threw its weight behind CCorp’s dealer-backed project to develop a central counterparty clearinghouse for credit derivatives. This was only days after CME Group announced a partnership with Citadel Investment Group to launch an exchange-like execution and clearing platform. In addition, NYSE Euronext Liffe and Eurex are working on central clearing initiatives through European regulators.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
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