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 Pierpont Derivatives Starts Clearing Interest Rate Swaps Through LCH.Clearnet’s SwapClear service via Nomura

New York, February 21, 2012 – LCH.Clearnet Limited (LCH.Clearnet), Pierpont Derivatives LLC (Pierpont Derivatives) and Nomura Securities International, Inc. (Nomura) today announced that Pierpont Derivatives is now actively clearing over-the-counter (OTC) interest rate swaps through LCH.Clearnet’s SwapClear service.

Initial trades were executed and cleared by Nomura and affirmed by MarkitSERV, allowing Pierpont Derivatives to leverage MarkitSERV’s straight-through-processing affirmation process into its workflow.

“The undisputed leader in interest rate swaps clearing for more than a decade, SwapClear allows new market participants like Pierpont Derivatives to decouple execution from counterparty credit concerns. With the expansion of its clearing expertise to clients via FCMs, SwapClear creates greater access to liquidity with reduced default risk – a benefit for all market participants,” said Akshay Das, managing director and head of derivatives sales and trading at Pierpont Derivatives. “Together, SwapClear and Nomura are supporting the commitment of Pierpont Derivatives to clearing interest rate swaps in advance of pending regulatory changes.”
“We are delighted to work with Nomura to facilitate Pierpont Derivatives’ first foray into interest rate swaps clearing. Buy-side firms are recognizing the risk management benefits of clearing, and are selecting SwapClear as it gives them unparalleled access to market liquidity,” said Daniel Maguire, Head of SwapClear U.S. “Nomura is among those leading the way in facilitating centralized clearing for their clients and we are proud to have them as a member.”

SwapClear is in constant dialogue with the buy-side to enhance its industry-leading service. Most recently, it announced faster trade registration and risk-free compression. The success of these recent roll-outs has resulted in client notional outstanding growing to US$309 billion.

“Providing client clearing services for OTC derivatives requires a total team effort internally and strong collaboration between client, clearer and clearinghouse,” said Stephen Scalzo, Nomura’s executive director of Clearing Services. “Working with SwapClear to provide OTC clearing to Pierpont Derivatives underscores Nomura’s commitment to our clients and to our jointly shared view that central clearing reduces systemic risk and improves transparency for all market participants.”

SwapClear was launched in 1999 by LCH.Clearnet, a CFTC-regulated derivatives clearing organization since 2001. The one million trades in SwapClear have an aggregate notional principal amount of more than $283 trillion, with a further $89 trillion of cleared transactions removed through multilateral trade compression.


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About Nomura
Nomura is a leading financial services group and the preeminent Asian-based investment bank with worldwide reach. Nomura provides a broad range of innovative solutions tailored to the specific requirements of individual, institutional, corporate and government clients through an international network in over 30 countries. Based in Tokyo and with regional headquarters in Hong Kong, London, and New York, Nomura employs over 27,000 staff worldwide. Nomura’s unique understanding of Asia enables the company to make a difference for clients through three business divisions: retail, asset management, and wholesale (global markets and investment banking). Nomura’s subsidiaries in the US include Nomura Securities International, Inc. (a member of SIPC) and Nomura Corporate Research and Asset Management Inc.  For Further information about Nomura, please visit www.nomura.com

About Pierpont Derivatives
Organized in 2011, Pierpont Derivatives is a wholly owned subsidiary of Pierpont Securities Holdings LLC and an affiliate of Pierpont Securities LLC (Pierpont Securities), which is an independent, SEC-registered broker-dealer and which provides institutional clients liquidity, execution and strategic advice in connection with fixed-income products, including US Treasury and Agency securities as well as repo and alternative financing products. Pierpont Derivatives clears its trading of fixed-income products (other than interest rate swaps) through Pierpont Securities.

About SwapClear
Established more than 12 years ago, SwapClear is the only truly global clearing service for interest rate swaps. Since being launched in 1999, it has cleared more than 1.5 million OTC interest rate swaps trades and currently has 61 clearing members. It was the first OTC clearing service to successfully handle a significant OTC interest rate swap default, doing so 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 five currencies were hedged and auctioned to other clearing members. SwapClear’s process resulted in no loss to any market participants.

About LCH.Clearnet
The LCH.Clearnet Group is the leading independent clearinghouse 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 clearinghouse sits in the middle of a trade, assuming the counterparty risk involved when two parties (or members) trade. When a trade is registered with a clearinghouse, that clearinghouse becomes the legal counterparty to the trade, ensuring financial performance of the trading parties; if one of the parties fails, the clearinghouse steps in. By assuming the counterparty risk, the clearinghouse underpins many important financial markets, facilitating trading and increasing confidence within these markets.

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 clearinghouse’s highly experienced risk management teams, which 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.