In the last few months, a number of new electronic derivatives brokerages have jumped into the e-commerce fray. The latest entrant is iFOX International, which has launched a new electronic brokerage geared to, of all things, the highly liquid, commoditized interdealer swaps market. The iFOX electronic trading system covers a variety of standardized interest rate swaps in euro and sterling, as well as swaps and forward rate agreements in the Scandinavian currency markets.

The premise: the derivatives world is chock-full of auction-based trading sites focusing on relatively exotic, one-off deals—but these types of systems don't handle high-volume, standardized products well at all. And while electronic interdealer brokerages like SwapsWire, ICor and Blackbird are attempting to establish themselves in the interest rate derivatives arena, they, too, leave something to be desired.

What does iFOX offer that they don't? A fast, efficient marketplace, says Jack Parrish, chief executive and founder of iFOX International. Most competing systems, while providing terrific functionality, are too broad in scope, offering too many trading screens and a bewildering variety of user options. iFOX, by contrast, doesn't try to get too fancy. Its core mission: to provide a marketplace for only the most liquid interest rate derivatives products. "Traders employ more technology today than ever before. Most don't have the time or the interest to go down a learning curve to use yet another system,” says Parrish. "While other platforms are attempting to replace voice brokers, we think it is smarter to carve out volume in the market where brokers have the least value-added: simple, standardized trades.

Ultimately, while systems like SwapsWire are good at facilitating deals between two distinct counterparties, Parrish hopes iFOX will provide the reference price to the entire market for the benchmark structures. Users are able to set up a dealing page by currency and product group in a matter of minutes, and the relevant standardized products—such as euro interest rate swaps—are displayed. Credit constraints based on counterparty and deal type are prescreened, and firm bids and offers are displayed live, with the user being able to hit them directly. The result: a bird's-eye view of the entire market.

Why is iFOX kicking things off in Europe? "The euro-denominated markets are extremely deep and among the least concentrated in terms of the number of dealers contributing to overall liquidity,” says Parrish. "Liquidity is the key to any trading platform. By decreasing our reliance on a few dominant players, I believe we stand a better chance of attracting that liquidity.”

The name might be unfamiliar, but iFOX is no Johnny-come-lately. In fact, it claims to be one of the world's first electronic interdealer brokers. In 1998, a Swedish company called Univits launched the system under the name VITS, covering Scandinavian interest rate derivatives products. Last year, Parrish, who previously spent six years at interdealer broker Prebon Yamane in Asia, got a look at the system and liked what he saw. Along with several other industry veterans, he formed iFOX International in order to acquire VITS, and has rebranded the platform under the iFOX name.

The system went live in November 1998 and has more than 25 live installations, with more in the pipeline. At the moment, the system trades only interest rate derivatives in European currencies, but Parrish has plans to list dollar- and yen-denominated products over the course of this year.