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Over $1 trillion notional of buy-side interest rate swaps cleared on SwapClear

New York; June 1 2012 – LCH.Clearnet Limited’s interest rate swap (IRS) clearing service, SwapClear, announced that more than one trillion dollars in buy-side client notional volumes have been cleared on its market-leading platform. Activity has intensified in the run-up to regulatory reform, as clients capitalize on the benefits of counterparty risk reduction, and operational and capital efficiencies.

By acting in advance of the clearing mandate for over-the-counter derivatives, buy-side institutions have a number of other advantages,  including the capacity to tap into an unrivaled dealer liquidity pool of more than USD 300 trillion notional outstanding. Other benefits include market-standard pricing, operational simplicity, and the ability to refine and optimize clearing solutions for the upcoming change in market structure.

“We are delighted to see such significant buy-side activity in advance of regulatory clearing mandates,” said Michael Davie, CEO of SwapClear. “By moving now, institutional clients are taking full advantage of a more robust infrastructure and the cost and efficiency gains of an orderly transition.”

“Every month this year we’ve seen an increase in the number of clients initiating their clearing process. Those buy-side participants who move to a clearing environment early are able to optimize their infrastructure and begin reaping the benefits of centralized clearing ahead of regulatory deadlines,” said Ray Kahn, head of OTC derivatives clearing at Barclays.

Clients are actively clearing with SwapClear in all major time zones. A third of all buy-side clearing activity on the platform took place in May 2012, following a marked jump in activity in March and April this year. So far, buy-side clients have cleared trades through their clearing members in eight of the 17 currencies available.  LCH.Clearnet is the world’s leading clearing house for interest rate swaps, and the only one to have successfully overseen a major swaps default.



To view the press release as a pdf click here

For more information about the service, please go towww.swapclear.com or call (212) 513.8282.

About SwapClear

Established more than 12 years ago, SwapClear is the only truly global clearing service for interest rate swaps. To date, it has cleared more than 1.5 million OTC interest rate swap trades in 17 of the world’s largest currencies, and its membership currently stands at 64. SwapClear has a total notional outstanding of more than $294 trillion, with an additional $122 trillion eliminated through multilateral trade compression using TriOptima’s triReduce service. SwapClear is also the only 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, resulting in no loss to any market participants. Swapclear.com   
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, foreign exchange, credit default swaps 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 a trade is registered with a clearing house, that clearing house becomes the legal counterparty to the trade, ensuring financial performance of the trading parties; 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 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 clearing house’s highly experienced risk management teams, which assesses 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.

LCH.Clearnet Limited is a wholly-owned subsidiary of LCH.Clearnet Group Limited