BlackRock, Goldman Sachs, Barclays Capital and LCH.Clearnet Ltd (LCH.Clearnet) announced today that BlackRock has cleared its first two interest rate swap (IRS) trades on LCH.Clearnet’s SwapClear.
BlackRock executed one of the trades with Barclays Capital and the other with Goldman Sachs. These trades were both cleared through Goldman Sachs. BlackRock executed the transactions on the Tradeweb platform with the counterparties, allocated the trades and then, through MarkitServ, matched and transmitted the trades to SwapClear via its clearer.
The ability to provide connectivity to an execution platform like Tradeweb, and to facilitate multi-party execution and clearing, demonstrates the flexibility and efficiency of SwapClear’s FCM model. Launched in March 2011, the model has increased choice for the U.S buy-side, giving them access to the world’s leading IRS clearing service.
“Executing with multiple dealers while maintaining operational efficiency for clearing services is a terrific step forward for the industry,” said Supurna VedBrat, managing director and Co-Head of Electronic Trading and Market Structure at BlackRock. “The client documentation framework set forth by the industry’s new give-up agreements and clearing addendums facilitated executing a block trade with an executing dealer and giving it up to a clearer.”
“We are pleased to have participated as an executing broker for BlackRock and to have established a framework to clear multi-lateral OTC derivatives transactions by leveraging the recently published bilateral execution agreement,” said Harry Harrison, Head of Rates Trading at Barclays Capital. “The adoption of central clearing will help improve liquidity, reduce systemic risk and bring greater transparency to the OTC derivatives markets, which will benefit all industry participants.”
“These interest rate swaps trades are among the first to be executed on an electronic platform and centrally cleared,” said Jack McCabe, co-head of Futures and Derivative Clearing Services at Goldman Sachs. “These transactions demonstrate our ability to provide clients with front to back execution and clearing services in preparation for the new regulatory requirements.”
Floyd Converse, head of U.S SwapClear Sales and Marketing at LCH.Clearnet said: “We are delighted to be collaborating with BlackRock to ensure that our market leading offering evolves in line with the needs of the buy-side. By clearing through SwapClear, clients benefit from a unique and proven default management process, portability, margin segregation and the ability to execute large block trades safely and efficiently.”
Jeff Gooch, ceo of MarkitSERV, said: “These milestone trades demonstrate that today’s infrastructure is poised to deliver electronically-executed trades to central clearing, in accordance with regulatory expectations. We are pleased that our clients are going live with new trade processing workflows that streamline the process of clearing OTC derivatives by electronically matching and routing trades for clearing.”
“These trades clearly demonstrate the benefits market participants will derive from the electronic trading and processing of interest rate swaps. The new paradigm is just around the corner and we are delighted to be integrated with SwapClear in advance of derivatives regulation,” said Lee Olesky, ceo of Tradeweb.”
