LCH.Clearnet’s SwapClear clears OTC interest rate swaps for Friesland Bank through ABN AMRO Clearing

- First client to clear OTC IRS transactions in the Netherlands - 

Amsterdam, London 19 July 2011

Friesland Bank, ABN AMRO Clearing Bank N.V. (ABN AMRO Clearing) and LCH.Clearnet Ltd (LCH.Clearnet), today announced that Friesland Bank has signed up to LCH.Clearnet’s SwapClear service to clear OTC interest rate swap (IRS) transactions through ABN AMRO Clearing. Friesland Bank is the first Dutch client to benefit from SwapClear’s proven risk management experience.

Friesland Bank, an independent bank with a total balance sheet of €11 billion, is the sixth largest general bank in the Netherlands. The Bank is fully supportive of the regulatory developments and is committed to adapting to the changes around increased clearing of OTC derivatives and improved transparency in the market.

ABN AMRO Clearing, a leading global securities services provider, is the primary clearing broker for Friesland Bank’s interest rate swap transactions. It will backload Friesland Bank’s portfolio of OTC IRS trades, representing the first client clearing transaction in the Netherlands.

“By backloading and clearing interest rate swap transactions, Friesland Bank will benefit from reduced counterparty risk, increased capital efficiencies and lower overall operational risks.” said Erik de Boer, General Manager Treasury & Financial Markets at Friesland Bank. “Clearing our trades through ABN AMRO Clearing and LCH.Clearnet’s SwapClear confirms our commitment towards a safer and more secure OTC environment.”

“We are delighted to be the first Dutch bank to offer client clearing for OTC traded interest rate swaps” said Alexander Jacobs, Head of the OTC Derivatives Clearing Service at ABN AMRO Clearing. “We would like to welcome Friesland Bank, a trusted partner for many years, and we look forward to taking our service offering to the next level. We are determined to remain at the forefront of the industry by offering central clearing of OTC traded products to our clients and providing them access to risk management solutions ahead of the regulatory changes.”

Michael Davie, CEO of the SwapClear service at LCH.Clearnet said, “We welcome the decision of Friesland Bank to clear their OTC IRS trades in SwapClear through ABN AMRO Clearing. We look forward to helping Friesland Bank realise the capital, operational and credit risk efficiencies they seek and congratulate them, and their partner ABN AMRO Clearing, for taking this step ahead of regulatory change. We will continue to develop SwapClear’s member and client offering to attract an increasing network of participants over time.”

To view the press release as a pdf click here. 
 

Media Contacts

About ABN AMRO Clearing

ABN AMRO Clearing, dedicated to servicing institutional market participants, such as professional traders, banks, brokers, hedge funds, corporates, asset managers and pension funds, offers clearing and financing on more than 85 of the world’s leading exchanges for members and non-members alike. We consistently rank among the top three clearers in every time zone based on turnover and number of clients. We process non-exchange listed investment instruments and alternative products including bonds, warrants, foreign exchange, forwards and energy.

www.abnamroclearing.com

About Friesland Bank

Friesland Bank N.V. is an independent bank which combines personal service and professional expertise. Friesland Bank’s client base consists of personal, institutional and corporate customers who value a bank that puts advice and tailor made solutions first.

www.frieslandbank.nl

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 fulfil 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, 7 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.