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What’s New in USD Rates?

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  • USD Rates volumes have returned to the levels we saw in March 2020.
  • We look at whether these volumes are being driven by US Treasuries, bond futures or OTC swaps.
  • Clarus provides volume data by tenor for all of these asset classes under a single data subscription.

CCPView provides granular data on traded volumes across Futures, Swaps and US Treasuries. With the recent sell-off in Fixed Income markets, I was interested to see what had happened to volumes across the whole of the Rates complex.

USD Outright Volumes

The chart below shows monthly volumes since March 2020:

Showing;

  • Monthly volumes in notional equivalents across all long-dated USD rates products.
  • The chart looks at all products with tenors longer than 2Y – covering Bonds (US Treasuries), ETD (bond futures) and OTC (interest rate swaps and OIS).
  • March 2020, when post-trade transparency data was first made available for US Treasuries, was obviously an unusual month with $35Trn+ traded across all products. This was largely driven by the pandemic-fueled volatility.
  • However, it is notable that Q1 2021 has also been marked by elevated levels of trading. This is likely driven by the large sell-off in USD rates that we have seen.
  • February 2021 recorded $33Trn in notional-equivalent traded, the largest volume month since last March. This was on the back of $26Trn traded during January, which was again the highest month since last March.

Product Split in USD Rates

The chart below shows the same data as above, but as a percentage of volumes traded:

Showing;

  • On average, 40% of notional is traded in cash bonds. This ranges from 32-48% month on month.
  • 38% of notional equivalent is traded in ETDs (bond futures). This ranges from 32-46% month by month.
  • 23% is traded as OTC (interest rate swaps). This ranges from 16% to 29%.
  • There is no particular pattern that suggests the recent sell-off has been focused in a single asset class. During January, US Treasuries were the largest market.
  • The effect of the roll in bond futures can be seen in the data for August, November and February, where the futures contracts are typically rolled prior to the last day of the month. This inflates volumes in bond futures and results in ETDs consistently recording a 45% share of total volumes in these months. It would be nice to smooth this effect out in our data.
  • Absent these rolls, US Treasuries are always the largest single market. Useful for considering where the most “liquidity” lies if you have a large chunk of risk to move.

10 Years

We can run the same analysis by any tenor we choose. I found it interesting to look at just the 10Y tenor first:

Showing;

  • Bond futures now jump to the largest asset class, with 48% of notional traded.
  • US Treasuries are the second largest at 35%.
  • OTC remains the smallest market – I find this surprising.

Let’s see if OTC triumphs in the longer end?

30 Years and Longer

This is a pretty interesting chart!

  • OTC derivatives were the largest notional traded during March 2020, recording 39% of total US Rates volumes.
  • This performance has only been repeated once, in June 2020.
  • In fact, OTC derivatives have dropped down to the least traded asset class in 2021, recording just 28% of total volumes.
  • Either way, in this long end of the curve (effectively capturing any product with a tenor longer than 10Y), the choice of asset class traded is very finely balanced.
  • The one year average split has been 32/37/30 Bonds/ETD/OTC.

5 Years

  • US Treasury volumes dominate the short-end of the curve.
  • USTs account for 46% of volumes on average.
  • ETD and OTC are pretty evenly balanced with 25-27% each.

ETD and OTC in particular compete against Eurodollar futures for trading activity in this part of the curve (although not as much as in the 2Y and shorter tenors). Our ETD figures for this chart only look at bond futures.

In Summary

  • USD Rates volumes have returned to the levels we saw in March 2020.
  • Over $33Trn traded in February 2021.
  • The overall split of volumes between US Treasuries, Bond Futures and OTC swaps is consistent month to month.
  • The split between these three asset classes varies between short and long-dated tenors.
  • Our data shows that 10Y is dominated by bond futures, whilst the shorter end of the curve is dominated by US Treasuries.

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Source: https://www.clarusft.com/whats-new-in-usd-rates/?utm_source=rss&utm_medium=rss&utm_campaign=whats-new-in-usd-rates

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NextGen.Net integration expertise gives Finsure strategic advantage

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Finsure is on track to launch a new tech solution with NextGen.Net’s ApplyOnline that will halve processing times and stop document double handling.

Finsure’s cloud-based broker CRM platform Infynity currently requires brokers to first upload, then re-download documents before they can upload and attach them to an application in ApplyOnline.

“This new piece of technology will enable the documents to be sent concurrently – similar to email attachments – and appear automatically in ApplyOnline,” says Simon Bednar, General Manager of Finsure Finance & Insurance and LoanKit Aggregation.

The solution will also integrate with their new customer portal.

“That’s where NextGen.Net and Finsure work really well together,” says Bednar.

“Our customer portal will allow customers to upload their documents on behalf of the broker. The broker will immediately see the documents in Infynity, confirm they’re correct and hit a button to send them to ApplyOnline along with the application data.”

Bednar estimates a 50 percent time saving, explaining “as part of that process we have a tax file number and sensitive data reduction piece of technology”.

“NextGen.Net work collaboratively with Finsure to ensure our systems talk to each other in a highly sophisticated manner to eliminate double handling and streamline the process from Point of Sale all the way to the lender’s approval,” says NextGen.Net national Customer Account Executive Greg Phillips.

“NextGen.Net and Finsure share the same vision to digitise and streamline the entire mortgage lending process,” says Phillips.

He adds that the seamless integration of ApplyOnline with Infynity, is “a holistic solution for Finsure’s brokers”.

Keen to take advantage of what open banking and NextGen.Net’s acquisition of Frollo might mean for their business, Bednar is excited about brokers being able to access borrower’s data directly from banks to inform an application.

“That’s exactly what I’m looking for, to have as little third-party integration and interaction as possible. It was great to see that NextGen.Net had that breadth of knowledge outside of submissions,” he says.

Bednar relies on NextGen.Net’s ApplyOnline platform to cover off on ‘efficiencies and accuracy’.

“That’s a huge piece of work in itself,” he exclaims, adding “we keep our platform open to allow brokers to be a little bit more fluid in how they collect the data; and the idea of them sending it to NextGen.Net is great for me because they effectively become the quality insurer and checker that allows our system to be efficient and accurate – so when it goes to the lender the data is complete.

“From a strategic partnership perspective that’s powerful.”

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://australianfintech.com.au/nextgen-net-integration-expertise-gives-finsure-strategic-advantage/

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TrueLayer raises US$70m to build the world’s most valuable Open Banking network

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TrueLayer, Europe’s leading open banking platform, today announced it has secured a US$70m Series D investment round led by new investor Addition. The latest raise reflects the growing demand for its open banking-based services and marks another significant milestone for TrueLayer on its mission to open up finance, building an open banking network that brings together payments, financial data, and identity to redefine how people spend, save, and transact online.

Existing investors, including Anthemis Group, Connect Ventures, Mouro Capital, Northzone, and Temasek, also participated, with a significant increase to the company’s valuation. Additional investors in the round include Visionaries Club, Surojit Chatterjee (CPO Coinbase), Zack Kanter (CEO Stedi), Daniel Graf (ex-Uber, Google, Twitter) and David Avgi (ex-CEO SafeCharge, CEO UniPaaS). It brings the total investment to date in TrueLayer to US$142m.

The new funding will be used to fuel global expansion and accelerate the development of premium open banking-based services that will continue to drive innovation and revenue growth for clients. It will also be used to expand TrueLayer’s engineering, product and commercial teams to meet the increasing global demand for its open banking platform.

TrueLayer’s API-first platform accounts for more than half of all open banking traffic in the UK, Ireland and Spain, processing billions of pounds in payments. It powers services for some of Europe’s fastest-growing brands, including Revolut, Trading 212 and Payoneer.

TrueLayer has a market-leading payment conversion rate that is 22% higher than other providers, according to OpenBanking UK and other bank sources, and up to 40% higher than cards. Merchants offering TrueLayer as a payment method in their checkout have found that on average, 1 in 3 consumers chose to pay via TrueLayer. As a result, open banking is displacing other payment methods, such as cards, as the default payment option online.

Over the past 12 months, TrueLayer has expanded its services across 12 European markets, growing payment volumes by 600x, and adding hundreds of new customers across digital banking, eCommerce, trading and investment, wealth management, crypto and iGaming. It has continued to innovate, for example, with the recent launch of PayDirect, combining instant pay-in capabilities with instant pay-outs, to deliver a higher converting, lower fraud method for online payments.

“When Luca and I started TrueLayer in 2016, we imagined open banking becoming a new digital channel for solving cost and complexities around payments, digital identity, credit data and much more. We wanted to open up this newly built infrastructure to many businesses and consumers. It is such a joy to see our vision coming alive and open banking based payments quickly becoming the new normal,” commented Francesco Simoneschi, CEO and Co-Founder at TrueLayer.

TrueLayer is rapidly expanding as demand for its open banking platform increases, largely driven by consumer demand for digital financial services that work better for them, and give them more control over their financial lives.

“We have achieved this milestone thanks to the hard work of our stellar team. Bringing radical new products into the hands of consumers and businesses is incredibly exciting,” explained Luca Martinetti, Co-Founder and CTO at TrueLayer. “This new financial network we are building on top of open architectures has massive long term implications for the whole fintech ecosystem and we won’t compromise our vision in any way.”

“That is why it is so important to select investors that can help you to plan for the next 15 years, not the next 15 months,” added Simoneschi. “The Addition team thinks very long term and it has been such a pleasure working together. They complement the incredibly strong group of experienced backers who align with our vision of how financial services are evolving.”

Lee Fixel, Founder of Addition, commented, “TrueLayer is ideally positioned to benefit from the trends shaping the future of financial services as more and more companies embed digitally native payments into their platforms. We look forward to supporting the TrueLayer team as they scale their offering and drive continued innovation.”

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Source: https://australianfintech.com.au/truelayer-raises-us70m-to-build-the-worlds-most-valuable-open-banking-network/

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Novatti’s Ripple partnership live to The Philippines

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Leading Australian digital banking and payments company Novatti, reports that its recently signed partnership with global payments disrupter Ripple, is now live with revenue-generating transactions taking place.

Ripple uses its decentralised, global financial network, RippleNet, to provide its partners with the ability to process global payments instantly, as well as providing access to emerging, high-growth capabilities, such as blockchain and the digital asset, XRP, a top five global cryptocurrency currently valued at more than USD$40 billion.

Novatti signed a new partnership with Ripple in December 2020 to provide Novatti’s fintech customers with access to these capabilities.

The initial focus of the partnership was to target cross-border transactions between Australia and the South- East Asia region, particularly the Philippines. This focus is delivering new customers, with Novatti now partnering with the Australian subsidiary of the Philippines’s largest non-bank, Filipino-owned, remittance service provider, iRemit, through RippleNet. This alone is expected to result in several thousand transactions a month being processed by Novatti through RippleNet. Revenue from this partnership is dependent on take-up of the services. Importantly, discussions are already underway to also expand this service to new financial services clients in South East Asia.

Managing Director of Novatti, Peter Cook, said, “We are delighted to see this partnership delivering for both Novatti and Ripple in such a short period of time. The partnership with Ripple not only provides Novatti’s customers with access to new, innovative payment solutions, it also highlights how Novatti’s partnerships translate into revenue.”

“Forming our partnership with Ripple was part of Novatti’s broader strategy to develop a banking and payments ecosystem that enables our existing platforms to scale quickly. In addition to Ripple, Novatti’s ecosystem now includes partnerships with world-leading payment and fintech companies including Visa, Apple Pay, Alipay, UnionPay International, Google Pay, Samsung Pay, Marqeta and Decta.”

“The early success of Novatti’s partnership with Ripple also highlights the benefits of our broader overseas expansion since the start of this year, with new licences obtained for the New Zealand market and Emersion now up and running in the US. As shown through Ripple, this expansion opens Novatti up to new revenue opportunities, and provides us with greater exposure to the global demand for digital payments that we expect to accelerate going forward.”

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Source: https://australianfintech.com.au/novattis-ripple-partnership-live-to-the-philippines/

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Cape awarded MVP Grant to kickstart new wave of Open Banking powered business finance tools

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Cape, the Corporate Card helping small to medium business (SMBs) take control of their cash-flow, has been awarded a prestigious Minimum Viable Product (MVP) grant by the NSW Government.

The Cape team is improving the operating efficiency and long-term success of growing businesses by automating accounting and helping lower their bills, enabling business owners to get their spend management under control. Cape’s solution utilises Open Banking to help businesses unlock capital to invest in growth, whilst optimising cash flow to save on unnecessary expenditure.

The grant was awarded thanks to Cape’s proposition to build a cash management platform to remove vendor, expense and spend management roadblocks, saving thousands of dollars in the process for business owners.

Cape’s founders said that the grant would go towards securing early-stage growth opportunities for the company, particularly in product development and sales initiatives, as the company seeks to transition out of the pre-revenue stage.

Ryan Edwards-Pritchard, CEO of Cape, commented, “We’re excited to have the support of the NSW government in our mission to help business owners stay on top of their cash and keep their companies healthy. The grant shows how invested the government is in developing the local economy and continuing New South Wales reputation as an active fintech hub.”

Stuart Ayers, Minister for Jobs, Investment, Tourism and Western Sydney Stuart Ayres commented, “It is fantastic to see promising startups such as Cape tap into the NSW Government’s Minimum Viable Product (MVP) grant. The MVP grant is designed to support promising startups like Cape progress from product development to first sales.

Cape is currently gearing up for their launch and will initially go to market with a Rewards platform, before delivering Machine Learning capabilities to streamline receipt and business expense management across supplies, third party services, SAAS subscriptions & payments.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://australianfintech.com.au/cape-awarded-mvp-grant-to-kickstart-new-wave-of-open-banking-powered-business-finance-tools/

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