LCH.Clearnet Limited (LCH.Clearnet), the world’s leading independent clearinghouse, today announced that SwapClear, its interest rate swap (IRS) clearing service, saw a rise in notional volume of USD 32.7 billion for buy-side client clearing over the last two weeks. This brings the total buy-side notional volume outstanding to USD 257billion. The increased volumes follow recent service enhancements and demonstrate the market’s appetite for robust clearing solutions.
Introduced on December 5 following extensive consultation with both the buy-side community and futures commission merchants, SwapClear’s enhancements include a broader range of collateral accepted for initial margin, risk-free compression, variable notional swaps, flexible trade submission and increased connectivity using SwapClear’s ClearLink API.
“Buy-side response to the enhancements—especially in the U.S.—drove the increase in volumes we’ve seen over the last two weeks,” said Daniel Maguire, head of SwapClear U.S. “SwapClear’s recent service enhancements were designed to meet buy-side client demand, particularly in terms of the expanded range of collateral now accepted for initial margin. This includes the Canadian dollar, euro, yen and pound sterling.”
“J.P. Morgan was delighted to clear several clients’ trades during the first clearing cycle of the enhanced SwapClear service,” said Piers Murray, managing director of OTC IR product clearing for J.P. Morgan. “With mandatory clearing on the horizon for mid-2012, we are comforted by the availability of clearing in 17 currencies and the broadened collateral pool, enabling clients to achieve maximum margin efficiencies for their existing books of business.”
“The recent enhancements made by LCH.Clearnet to its SwapClear service add to a growing market capability in the IRS clearing landscape,” said Bob Burke, global head of OTC clearing at Bank of America Merrill Lynch. “BofA Merrill Lynch was pleased to use the enhanced service to clear client trades and will continue its partnership with SwapClear and the broader buy-side community to further promote the benefits of centralized clearing.”
The SwapClear service was launched in 1999 by LCH.Clearnet, a CFTC-regulated derivatives clearing organization since 2001. The one million trades in SwapClear have an aggregate notional principal amount of more than USD 288 trillion, with a further USD 89 trillion of cleared transactions removed through multilateral trade compression.
“The latest enhancements make the SwapClear service a very competitive and compelling IRS clearing option for U.S. buy-side clients,” said Christopher Perkins, global head of derivatives clearing at Citi. “The changes are in direct response to our clients’ requirements, so they have been well received.”
