Interdealer brokers Tullett Prebon and Calypso Technology plan to launch the TP Correlation Service. Using Calypso's Galapagos platform, the service will provide Tullett Prebon's bespoke synthetic CDO clients with the ability to explore a range of transactions from a pool of anonymously-provided liquidity.

Tullett Prebon and Calypso Technology believe this is an important initiative as it has the potential to recreate liquidity in a marketplace.

Bespoke Synthetic CDOs are highly customisable collateralised debt obligations in which the underlying portfolio comprises credit default swaps. Counterparties typically exchange tranches of risk on agreed portfolios of credit default swaps and the tranches are defined by the level of credit risk exchanged. They have been heavily used as investment and trading instruments over the last 10 years but the events of the credit crisis have led to dramatic reductions in liquidity and transparency as well as very large shifts in valuations.

Many institutions who want to provide liquidity and support the marketplace are finding current processes inadequate.

Clients using the platform will be able to upload individual trading objectives and constraints to the secure and confidential Galapagos environment where the platform's evolutionary algorithms will identify the optimal risk reducing trades in the market at any one time. The service is to be launched in the first quarter of 2010.