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Overview : Trade Capture : Calculations and Real Time Monitoring : Margin Account Management : Reset Rewind : The Trading Day  

Xylinq is a trading system for synthetic financial products.

The synthetic trades are made up of contracts bought by Buyers from Sellers. These trades, also known as Refinancing Trades allow a Buyer to receive a price return (including cash dividend equivalents) on a security from a Seller but without actually funding the underlying security. In effect, the Buyer experiences all the economic cash flows from owning the security.

The Seller is funding the contract position by hedging an equal amount of physical trades within the financial markets. The Seller will charge interest to the Buyer. The Buyer provides margin to help fund the position.

Xylinq calculates all the cash economics of the synthetic on a daily basis and the rolls the cash flows into a Client Margin Account.

The synthetic contracts are complicated in that:

  • The performance and interest currency dividend currency and margin currency can all be different to the underlying security currency
  • The interest rate charged on the notional value of contract positions and on the margin can be at various spreads (from a benchmark rate) depending on whether the notional values are long or short
  • The cash dividend equivalents could be split at particular percentages depending on whether the position is long or short and the domicile country of the buyer

Xylinq has built-in flexibility to cope with the diverse nature of synthetic trading terms between Buyers and Sellers .

A synthetic buyer could be a Hedge Fund.

A synthetic seller could be the Prime Brokerage & Swaps desk of an investment bank.

However, some financial intermediaries trade back-to-back synthetics and hence trade as both a Seller to Hedge Funds and a Buyer with Prime Brokers.

Xylinq has been designed to cater for all these participants: Hedge Funds, Investment Banks and Intermediaries.

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