Clear the Haze: How to Make Derivatives Trading More Transparent With Market Color

Katherine Mitchell

| Head of Demand Generation

September 13, 2022

Opaque, illiquid markets make price discovery difficult, adding friction to the trading process. For example, OTC derivatives, such as interest rate and credit default swaps, don’t trade on exchanges, which blurs the view of prices and trading flow. Increasingly, regulators demand more transparency from these markets as well. In addition, customers want greater clarity on prices and trading flows to fine-tune their trading strategies.

A leading market infrastructure firm sought to innovate its market-data products. For example, this firm provided price-discovery information. But the use of traditional statistical disclosure limitation (N-K) rules to protect privacy masked substantial value. 

Protect customer privacy and provide market color

Leaders at the market infrastructure firm wanted to provide their clients with more market color, while still protecting the privacy of customer trades and strategies. 

They accomplished these seemingly incompatible goals using LeapYear’s privacy-enhancing technology. LeapYear’s technology applies enterprise-grade differential privacy, which enables this market infrastructure firm to:

  • Discover market color in opaque markets: The market infrastructure firm has used LeapYear to enhance the quality and depth of price discovery they can provide to clients. In addition, the company has set a new market standard by providing 2.5X more instrument coverage and 4X more frequent reporting.
  • Build modern data monetization products: The market infrastructure firm can now securely monetize its sensitive data. LeapYear enables the company to provide its customers with the granularity, price discovery, and flow trading information they need. All with proof-of-privacy protection.
  • Innovate without friction: LeapYear installs in any environment, including on-premises, cloud, and hybrid. And customers can either leave their existing business rules alone or replace static rules with LeapYear’s dynamic-privacy algorithms. In addition, this market infrastructure firm can choose how it uses the LeapYear platform, which speeds time to value. 

Any firm operating in opaque, illiquid markets can achieve similar results using LeapYear to enable differential privacy applications.  

Want to learn more? Download the case study. 

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