J.P. Morgan and Societe Generale have invested in fintech firm, Wematch, which provides technology that augments how traders at banks match, negotiate and manage trades. This brings the audit and control benefits of electronic tools to voice trading, delivered as web-based software-as-a-service technology. Financial details were not disclosed.
Wematch launched its interest rates offering in June, with 10 banks matching and negotiating Euro IRS curves, butterflies, basis and gadgets structures, with single stock and index options to follow in the coming months. This was built on existing Wematch services for securities lending and equity derivatives and the firm now plans to build out services to more asset classes and instruments.
There are now 40 banks and more than 750 traders on Wematch cross-assets with more onboarding and billions of dollars in deal flows matched using its technology. Despite the growth and benefits of e-trading, in some markets institutional investors still conduct most of their trading over the phone, or through interdealer brokers.
Still, there’s plenty of room to run. Despite pressure from regulators for more trades to be conducted on electronic trading venues, it is estimated that over 80% of structured products and FX derivatives are still transacted by voice.
The interest rate swaps market is worth $2.1 trillion a day, according to the Bank for International Settlements, with over 70% of that business handled by phone negotiation.
Wematch came through J.P. Morgan’s In-Residence Programme and Societe Generale’s Global Markets Incubator to foster the expansion of the fintech’s offer across asset classes and instruments. The funding takes J.P. Morgan’s and Societe Generale’s relationship with Wematch from users to investors, with the banks already active on Wematch across all existing platforms.
Joseph Seroussi, co-CEO of Wematch, said in a statement: “Wematch is leveraging on the latest available technologies and the traders’ community permanent feedbacks and inputs to develop its capital market solutions. Our objective is to have a significant impact on the bottom line expenses of Financial Institutions by rolling out the Wematch technology on all markets, internal, or dealer-to-client activities.”
Pasquale Cataldi, head of Markets Lab at J.P. Morgan, said in a statement: “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.”