Buy-side Interest Rate Swap Clearing Surges Ahead of Dodd-Frank Mandate

May 1, 2012

-Client clearing on SwapClear up by 175% in 2012 to over USD 700 billion total notional

LCH.Clearnet Limited’s (LCH.Clearnet) leading interest rate swap clearing service, SwapClear, announced buy-side cleared volumes up by 175% y/y to April 2012. A marked acceleration in cleared volumes over the last two months has driven total end-user client notional cleared on SwapClear to USD 712 billion. The movement towards central clearing of interest rate swaps comes ahead of the regulatory mandate, expected in 2012 in the U.S., and soon after in Europe.  As demand for clearing increases, buy-side firms are currently clearing across eight of the 17 currencies available and have already started to backload existing portfolios.

“The pipeline of buy-side clients looking to use SwapClear has grown considerably in the last two months, a trend which shows no signs of slowing. While regulation is a catalyst, it’s the inherent benefits of central clearing which are driving this market evolution,” said Daniel Maguire, head of SwapClear U.S.“

“These numbers confirm the trend towards voluntary client clearing in both the U.S. and Europe,” said Ray Kahn, head of OTC derivatives clearing at Barclays. “This early clearing activity is important to ensure operational and infrastructural readiness ahead of the regulatory mandates.”

SwapClear was launched in 1999 by LCH.Clearnet Limited, a CFTC-regulated derivatives clearing organization since 2001. The one and a half million trades in SwapClear have a total notional value of more than USD 300 trillion. SwapClear clears more than fifty percent of interest rate swaps. Its membership currently stands at 64.

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