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Daniel Maguire Named Head of SwapClear U.S.

NEW YORK; October 27, 2011 – LCH.Clearnet Group (LCH.Clearnet), the world's leading independent clearinghouse, today announced it has appointed Daniel Maguire as the Head of SwapClear U.S., a newly created position that underscores the company’s commitment to serving the American market.

SwapClear is LCH.Clearnet’s global clearing service for OTC interest rate swaps (IRS), which has been live and active since 1999 and has been operating in the United States as a CFTC-regulated derivatives clearing organization since 2001. The 1 million trades in SwapClear have an aggregate notional principal amount of more than $300 trillion, with a further $67 trillion of cleared transactions removed through multilateral trade compression.

SwapClear is seeing U.S. end users move to clear IRS in advance of the implementation of Dodd-Frank, driven by their desire to reduce counterparty risk exposure.

 “We are offering a tailor-made, U.S.-centric product that enables IRS users to establish multiple, liquid counterparty relationships through our organization,” Mr. Maguire said. “We are continuing to work with clients throughout North America as they establish futures commission merchant (FCM) relationships and clear through SwapClear.”

As an organization solely dedicated to clearing, LCH.Clearnet is singularly focused on providing clients a best-in-class clearing service. LCH.Clearnet is the only clearinghouse to have managed a significant OTC default, that being Lehman Brothers in 2008. During the default, Mr. Maguire was also responsible for the fixed income (RepoClear) default management close out, actively trading, hedging and transferring the Lehman Brothers’ RepoClear portfolio.

“It is important to recognize that clearing is not just risk management, post-trade processing and services offered in a ‘peace-time’ environment. The core of successful OTC clearing is sound risk management and robust default management that passes the test in ‘war-time,’ an actual default event,” said Mr. Maguire. “Our track record, including the successful close out of the Lehman portfolio, demonstrates our provenance and experience in handling major defaults of large OTC portfolios of risk – without losses to any other user of our clearinghouse.”

“As SwapClear continues to gain momentum in the U.S., it has become essential to have an on-the-ground leader to drive SwapClear’s expansion,” said Michael Davie, CEO of SwapClear. “Daniel, with his 12 years experience in derivatives, an extensive understanding of risk, default management and clearing’s nuances, is that leader.”

In addition, SwapClear’s U.S. team has rapidly grown over the past year, adding positions in legal, operations, risk, product, sales and regulatory affairs, with continued plans to grow. Clearing members have almost doubled in 2011 to reach 59.

Prior to this appointment, Mr. Maguire was SwapClear’s Executive Director of OTC Derivatives, Risk and Operations. He was previously a Vice President and Manager of Global Commodity Exotics and Hybrids Trade Support at JP Morgan. He first joined LCH.Clearnet in 1999 and was responsible for the implementation and subsequent extension of the end-to-end SwapClear service. He holds a bachelor’s degree in economics and public policy from Leeds Metropolitan University.

SwapClear is the only OTC clearing service to have successfully handled a significant OTC default, when it resolved Lehman Brothers’ $9 trillion IRS default in 2008. In that instance, SwapClear’s default management process ensured that more than 66,000 trades in 5 currencies were hedged and auctioned off, with all losses contained within 40% of Lehman Brothers’ initial margin. The default was resolved in less than three weeks, with no losses to other market participants, and the remainder of the margin was passed back to the bankruptcy administrators. 

For more information about the service please go to www.swapclear.com or call +1 212 513 8282.

To view this press release as a pdf click bere.

About LCH.Clearnet

The LCH.Clearnet Group is the leading independent clearing house group, serving major international exchanges and platforms, as well as a range of OTC markets. It clears a broad range of asset classes including: securities, exchange traded derivatives, commodities, energy, freight, interest rate swaps, CDS and euro and sterling denominated bonds and repos; and works closely with market participants and exchanges to identify and develop clearing services for new asset classes.

A clearing house sits in the middle of a trade, assuming the counterparty risk involved when two parties (or members) trade. When the trade is registered with a clearing house, it becomes the legal counterparty to the trade, ensuring the financial performance; if one of the parties fails, the clearing house steps in. By assuming the counterparty risk, the clearing house underpins many important financial markets, facilitating trading and increasing confidence within the market.

Initial and variation margin (or collateral) is collected from clearing members; should they fail, this margin is used to fulfill their obligations. The amount of margin is decided by the clearing house’s highly experienced risk management teams, who assess a member’s positions and market risk on a daily basis. Both the soundness of the risk management approach and the resilience of its systems have been proven in recent times. LCH.Clearnet is regulated or overseen by the national securities regulator and/or central bank in each jurisdiction from which it operates.