THE PHILIPPINES Thursday saw its first deal executed via the country?s first electronic over-the-counter (OTC) derivative trading and brokering system run by voice and electronic interdealer broker ICAP Philippines.

Two banks licensed by the Bangko Sentral ng Pilipinas to handle derivatives, or sophisticated hedging instruments whose values vary alongside underlying instruments, entered into a peso interest rate swap transaction via ICAP?s system I-Trade.

The transaction is a one-year peso interest rate swap for P50 million, based on ICAP data.

An interest rate swap, a very popular and highly liquid instrument, is a derivative in which one party exchanges a stream of interest payments for another party?s stream of cash flows. It can be used by hedgers to manage their fixed or floating assets and liabilities and can also be used by investors to profit from changes in interest rates.

?I-Trade is a very efficient electronic brokering system in the Philippines? interdealer marketplace where ICAP already provides OTC voice brokering services to professional wholesale market participants,? ICAP said.

?ICAP?s electronic I-Trade platform complements the voice option. It offers existing market participants the choice of mirroring current voice brokered execution processes in an electronic format,? the company said.

Only peso interest rate swap (IRS) products are available on I-Trade at present but in the future, ICAP plans to introduce foreign exchange forwards.