November saw record volumes for LCH.Clearnet Limited’s (LCH.Clearnet) market leading interest rate swap clearing service, SwapClear. The total number of cleared OTC trades for the month reached 76,650 trade sides, 12% more than October and a 24% increase on November 2009. The increased figures bring the total outstanding number of IRS transactions to 1,720,390 trade sides with a notional value of USD248.3 trillion equivalent.
The last quarter saw an average of 3,309 trade sides cleared daily and over the last five years the notional value has risen at a 40% per annum compound rate, demonstrating the value of the SwapClear clearing model.
Michael Davie, ceo, SwapClear at LCH.Clearnet said: “The strong growth in IRS volumes indicates that SwapClear’s clients recognise the benefits of a cost-effective, high-performing clearing service which complements the flexibility of OTC trading. The regulatory changes, aimed at strengthening financial stability, mean that participants will increasingly seek to manage their risk through central clearing. We are delighted to see demand for such services continue to grow ahead of the implementation of the legislative reforms.”
Established over eleven years ago, SwapClear’s membership has grown steadily and now clears trades for 35 direct members and their clients, while the product scope has grown to cover the world’s 14 largest currencies with tenors up to 50 years in USD, EUR and GBP. The only truly global clearing service for IRS, SwapClear now clears approximately 50% of the market by notional value and has cleared over 2.7 million trades since launch in 1999.
In December 2009, LCH.Clearnet was the first clearing house to launch IRS clearing for buy-side clients through SwapClear, offering a unique level of security to clients in the case of a bank default through margin segregation and portability of contracts. The introduction of the FCM (Futures Commission Merchant) model for SwapClear early next year* will increase choice for US based customers, enabling them to clear with the world’s leading IRS clearing service within a familiar framework.
*subject to regulatory approval
N.B.: Volumes are measured in trade sides for consistency with statistics published by BIS and other sources