Clearing Of European Subordinated Financials CDS Launched
- Introduces clearing for Markit iTraxx Europe Subordinated Financials Index and single names
- First CCP to offer clearing of Subordinated Financials Single Name CDS
- Goldman Sachs among first participants to clear the products
- Demonstrates continued growth and innovation of the service, following a record year for volumes
.@LCH_Clearing launches clearing of European Subordinated Financials Credit #Derivatives, demonstrating continued growth and innovation at #CDSClear. @GoldmanSachs is among the first participants to clear the new products. Read the press release: https://t.co/fzFX6Wfvuw pic.twitter.com/FWrXqBQJBI
— LCH (@LCH_Clearing) February 20, 2020
LCH, a leading global clearing house, today announced that its CDSClear service has expanded its product offering to clear Markit iTraxx Europe Subordinated Financials Index and its 30 single name constituents. Goldman Sachs is among the first participants to clear these products.
Subordinated Financials CDS are credit default swaps referencing the subordinated debt of the main European banks and insurance companies.
Frank Soussan, Global Head of CDSClear, said: “LCH is proud to offer the broadest product offering of any credit clearing house. This is first time that both Subordinated Financials Indices and all their single name constituents are available for clearing. The launch comes following rigorous risk reviews and testing, both internally and with the market. We are pleased to offer another innovative product which gives our members and their clients the opportunity to make their trading activity more efficient.”
Jasdeep Singh Aneja, Managing Director, Goldman Sachs said: ”We are pleased to be among the first to support this important development. Clearing the full range of Subordinated Financials, alongside Senior Financials single names allows us to benefit from significant margin offsets through LCH’s portfolio margining, in addition to the inherent operational and counterparty risk management advantages of clearing.”
Commenting on the launch, Christoph Hock, Head of Multi-Asset Trading, Union Investment, said: “CDSClear is a key partner for our credit business. We highly appreciate that innovation has always been one of the main drivers at CDSClear as it allows us to extend clearing benefits to a greater portion of our credit portfolio. We are very supportive of any new product launch as we are keen on clearing the broadest scope of products on a voluntary basis, in addition to the EMIR mandated products. We’re delighted to be part of this first for the market.”
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.
Triparty repos can be executed across U.S. Treasury securities to central clearing.