Toronto-Dominion Bank Group joins LCH.Clearnet’s SwapClear 

15 March 2011

Toronto-Dominion Bank Group (TD Bank) has announced its intention to join SwapClear, LCH.Clearnet Ltd’s (LCH.Clearnet) market leading over-the-counter (OTC) interest rate swap clearing business. The bank has commenced implementation and will begin clearing its IRS business as soon as this is completed.

Headquartered in Toronto, Canada, with 81,000 employees in offices around the world, The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group. TD Bank offers a full range of financial products and services to approximately 19 million customers worldwide.

“TD Securities is committed to being a leader in the OTC market.  In joining SwapClear we gain improved transparency, reduce risk, better manage capital and balance sheet exposures and move a step closer to conforming with emerging global standards,” said Mark Faircloth, Vice Chair, Rates & Foreign Exchange, TD Securities.

Michael Davie, CEO, SwapClear, LCH.Clearnet said: “We are delighted to welcome such an important player in the market to SwapClear and look forward to supporting them as they fully prepare for the changes the G20 commitments will bring.  SwapClear is a constantly evolving service, offering new and enhanced products and adapting as new regulations become effective.    We work closely with all participants to ensure that our offering develops in line with the needs of the market.”

LCH.Clearnet’s market leading interest rate swap clearing service, SwapClear, has cleared over 1.5 million OTC IRS trades since launch in 1999. It currently has 49 clearing members and its portfolio contains 850,000 trades with a notional value in excess of $266 trillion, down from $305 trillion as a result of terminating $39 trillion cleared IRS transactions through on-going compression.  SwapClear’s FCM (Futures Commission Merchant) service, launched this month,  has increased choice for U.S. based customers, enabling them to clear with the world’s leading interest rate swap service within a familiar framework.
 

To view the press release as a pdf click here.

About LCH.Clearnet

LCH.Clearnet (then The London Produce Clearing House Limited) began clearing commodity futures in 1888.  Today it 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, energy, freight, interest rate 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 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, reducing risk, facilitating trading and increasing confidence within the market.

Initial and variation margin (both 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;  in IRS, 6 times intraday.  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.