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A-Team Insight Blogs

Knight Capital Group Appoints Merrill’s Scott and Tradeweb’s Shapiro to Head CDS Efforts

Knight Capital Group has appointed ex-Merrill Lynch executive Andrew Scott as managing director to oversee the operations of its credit default swap (CDS) platform NetDelta. The vendor has also poached Michael Shapiro from Tradeweb to become director responsible for leading NetDelta’s sales effort.

At Merrill Lynch, Scott was the lead attorney for credit derivative products and a senior representative for key industry and regulatory initiatives. Prior to joining Knight, Shapiro was responsible for sales, business strategy and product development for TradeWeb’s credit derivatives trading platform, including leading a global effort to increase post-trade business for CDS and interest rate swaps (IRS).

Steven Sadoff, executive vice president and chief information officer at Knight Capital Group, hopes that both hires will use their credit derivatives experience to strengthen the commercial viability of the vendor’s CDS platform, which it is pitching as a solution to counterparty risk. Netdelta is being offered as an alternative to central clearing via the introduction of standard contracts and the use of pooled credit, maintaining the bilateral nature of CDS contracts. According to the vendor, counterparty risk is minimised by multilaterally netting transactions and using participants’ credit lines to reallocate exposures so that their market exposure remains neutral.

Sadoff explains: “NetDelta can help its platform participants address concerns regarding risk management, trade settlement and balance sheet usage. Indeed, counterparty risk management has become increasingly important, and both the industry and regulators are actively looking for ways to reduce systemic risk in the market. We believe NetDelta has a solution that addresses risk concerns without hindering the ability of market participants to invest and trade CDS.”

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