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Alliance Bernstein Starts Clearing Interest Rate Swaps with SwapClear

New York, 13 June 2012

LCH.Clearnet Limited (LCH.Clearnet) today announced that Alliance Bernstein is now actively clearing over-the-counter interest rate swaps through LCH.Clearnet’s SwapClear service. The move comes in advance of regulatory mandates in the U.S. to clear over-the-counter derivatives.  

The initial trades were executed and cleared by Citi and affirmed over MarkitSERV. These trades complement the $1 trillion notional of interest rate swaps that have now been cleared on behalf of buy-side clients using the SwapClear service.

“Clearing ahead of the regulations makes sense for us. It means we can plan for the changes in market structure and optimize our clearing solutions in line with our portfolio requirements,” said James Wallin, senior vice president, fixed income at Alliance Bernstein.

“Alliance Bernstein is the latest in a rapidly growing and diverse group of clients to adopt central clearing. These firms are reaping the capital and operational efficiencies of being at the vanguard of change,” said Daniel Maguire, head of SwapClear U.S. “We are delighted that they – like the others – selected SwapClear as their clearing service of choice for our broad product range, unrivaled liquidity, and superior risk management capabilities.”

“Mandatory central clearing for some members of the buy-side is rapidly approaching, and we’re seeing many clients, like Alliance Bernstein, making an early transition ahead of regulation because they believe it makes commercial sense,” said Christopher Perkins, global head of OTC clearing at Citi. “Working with central counterparties to provide OTC clearing underscores Citi’s commitment to our clients throughout the globe, and reinforces our shared vision to increase transparency and reduce systemic risk.”

SwapClear was launched in 1999 by LCH.Clearnet, 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 $126 trillion of cleared transactions removed through multilateral trade compression.


To view the press release as a pdf click here   
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 $300 trillion, with an additional $126 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. www.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