State Street Global Markets Intends to Join LCH.Clearnet’s SwapClear Service

New York, February 13, 2012 – LCH.Clearnet Ltd. (LCH.Clearnet) today announced that State Street Global Markets, LLC (SSGM), intends to join SwapClear, LCH.Clearnet’s global over-the-counter (OTC) IRS clearing service, by June, 2012 subject to regulatory approval. SwapClear’s total clearing membership is currently 61.

“Our membership will provide our institutional investor clients with a key venue for clearing the multiple swap products now being brought into a cleared environment under the emerging regulatory changes in Europe and the United States,” said Clifford Lewis, executive vice president and head of State Street’s Exchange business. “State Street’s diverse, global client base demands a wide range of clearing choices across regions, exchanges and products. We look forward to joining SwapClear as a member and to making the benefits of its services available to our clients.”

"As we continue to grow our global footprint, State Street, a highly respected financial institution, will be a welcome addition to our membership roster,”  said Michael Davie, SwapClear CEO. “Expanding our membership reinforces our position as the clearing service with the deepest pool of liquidity, and further demonstrates our commitment to providing superior risk management to the global IRS market.”

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About SwapClear

Established more than 11 years ago, SwapClear is the only truly global clearing service for IRS. Since being launched in 1999, it has cleared more than 1.9 million OTC IRS trades and currently has 61 clearing members.  Meanwhile, there are currently over one million trades in SwapClear representing a total notional principal amount of more than $286 trillion, with a further $99 trillion of cleared transactions torn up through multilateral trade compression.

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.