BNP Clears Under CME
The broker-dealer unit of BNP Paribas will offer clearing services under CME Group.
BNP Paribas Securities has announced that it will join CME Group to clear credit default swaps, as well futures and over-the-counter interest rate swaps.
“Regulators will be mandating central clearing for over-the-counter derivatives,” said Avi Pemper, managing director at BNP Paribas and responsible for OTC client clearing for fixed income in the US. “We intend to provide our clients with clearing access to multiple CCPs. Adding the ability to clear credit default swaps on the CME supports this vision.”
The move is part of a series of steps that broker-dealers are taking as they prepare for upcoming regulatory requirements. As a CME clearing member for CDS, BNP Paribas Securities will be able to meet regulatory mandates that require credit derivatives between financial institutions be cleared through a clearinghouse.
“Market participants, buy-side and sell-side, are dedicating a lot of time and resources to Dodd-Frank readiness,” said Pemper. “There’s still a lot of work that remains to be done, not only by regulators on rulemaking, but also by market participants. We’re having a constant dialogue with our clients about clearing in the U.S. and Europe and working with them to prepare for the advent of mandatory clearing and electronic execution of OTC derivatives.”
CME recently announced that it had set daily and monthly records for clearing. It cleared $827 million in IRS on Sept. 9, and over $1 billion of CDS on Sept. 8. For the month of September, it has already cleared $1.5 billion in IRS and $2.4 billion in CDS, surpassing previous highs of $1.2 billion and $287 million, respectively, which were reached last month. The exchange operator attributed the high volume on growing demand from customers, who are looking to meet regulatory requirements ahead of the Dodd-Frank mandates.
Trading Technologies has partnered with Chinese clearing broker COFCO Futures.
Phase 5 of the uncleared margin rules (UMR) took effect from September 2021.
Temporary equivalence is set to expire on June 30 2022.
IRS trading volumes have fragmented without an equivalence agreement.
Phase 5 of the uncleared margin rules came into effect on 1 September.