19 July 2013
First credit default swap clearing service for European clients
LCH.Clearnet SA (LCH.Clearnet), the multi-national central counterparty’s Paris-based European CCP, has received regulatory approval to clear credit default swaps (CDS) for European clients, through CDSClear, LCH.Clearnet’s credit default swap clearing business. This is the first time European clients will be able to clear CDS indices and, subject to regulatory approval, LCH.Clearnet expects soon to be able to offer single name CDS, both of which will bring greater efficiency to the marketplace.
CDSClear’s index clearing service offers European clients improved portability conditions through its Asset Tagging solution. Asset Tagging allows clearing members to track which of their client-related non-cash collateral and positions could be “ported” (i.e. transferred) to another member in the event of a default, in line with EMIR requirements. The index clearing service also streamlines the legal documentation process between clients and clearing members.
CDSClear’s single name clearing service will provide clients with extensive portfolio margining benefits.
Charlie Longden, CEO, CDSClear said, "Global regulatory momentum is leading OTC market participants to clearing houses with robust and proven risk and default management. LCH.Clearnet clears the broadest set of European credit indices, and we are pleased to extend the benefits of our CDS clearing service to European clients."
Barry Hadingham, Head of Derivatives and Counterparty Risk, Aviva Investors, said, “The market has been looking for a European CDS clearing solution for some time now, and we welcome LCH.Clearnet’s launch of CDS clearing for non-US clients. We are particularly pleased to see that the solution offers improved portability conditions and easy to navigate legal arrangements.”
Clearing members will continue to benefit from the ability to post non-cash collateral on a pledged account opened in the books of a Central Securities Depository (CSD) to cover their margin requirements.
The LCH.Clearnet Group is a leading multi-asset class and multi-national clearing house, serving major exchanges and platforms as well as a range of OTC markets.
LCH.Clearnet’s world-class risk management framework provides exceptional levels of protection to international markets, as has been proven through the management of recent defaults. As demand for robust clearing services continues to grow, LCH.Clearnet is committed to achieving the highest standards of risk management across all asset classes cleared.
LCH.Clearnet is majority owned by London Stock Exchange Group (LSE.L), a diversified international exchange group that sits at the heart of the world's financial community.
For more information on LCH.Clearnet visit www.lchclearnet.com/media_centre
Contact: Kamyar Naficy +44 (0) 20 7426 3787