12.08.2011

CCPs Build Out Connectivity

12.08.2011
Terry Flanagan

Enhancements enable buy side to connect to clearing platforms.

Clearinghouses are facilitating buy side clearing by extending their range of services and providing easier ways to connect.

SwapClear has gone live with significant enhancements to its SwapClear service, following consultation with the buy side and FCM, the company said.

These enhancements will support the entire buy side community as it moves toward the adoption of centralized clearing.

The platform is directly accessible via Tradeweb and Bloomberg (VCON and Electronic Trading) through SwapClear’s ClearLink API in addition to MarkitSERV.

“Historically, firms connected into SwapClear via MarkitSERV,” Daniel Maguire, head of SwapClear U.S., told Markets Media. “Now, transactions can be affirmed on Tradeweb, Bloomberg or MarkitSERV, and then sent via ClearLink into SwapClear.”

In addition, the platform offers risk-free compression and accepts a broader range of collateral for initial margin, offers increased connectivity and variable notional swaps.

It has extended range of acceptable collateral for FCM client clearing: CAD, EUR, GBP and JPY cash can be used to cover initial margin requirements, plus a wide range of non-USD sovereign and government-guaranteed bonds.

Morgan Stanley, which has been working closely with LCH.Clearnet on the evolution of its U.S. offering, said that the current SwapClear service enhancements establish several important changes, including the expansion of SwapClear’s eligible product set and the improvement of middleware connectivity, said Andrew Huszar, U.S. head of OTC Clearing at Morgan Stanley.

According to the International Swaps and Derivatives Association (ISDA), SwapClear currently clears more than 50 percent of all OTC interest rate swaps globally and more than 95 percent of the overall cleared OTC interest rate swap market.

SwapClear regularly clears in excess of $1 trillion in new OTC IRS trades each day and has close to 1 million cleared trades outstanding, equating to $290 trillion in notional open interest, including $226 billion in client clearing business

“Enhancing the central clearing offerings is key to driving support across the entire industry,” according to Raymond Kahn, head of OTC Derivatives Clearing, Barclays Capital. “Providing a multi-currency and global offering, combined with a proven track record in interest rate swaps clearing, will help to advance the adoption of OTC derivatives clearing.”

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