LCH.Clearnet Launches Clearing Service for Credit Default Swaps

nday, March 29, to bring security and transparency to OTC derivatives markets.

LCH. Clearnet SA reported it successfully cleared the first credit default swap (CDS) index contracts on Monday, March 29th. While LCH.Clearnet is the global leader in clearing interest rate swaps, the move into CDS index contracts both expands and diversifies its offering.

Both regulators and market participants have been keen to see clearing for CDS introduced to bring security and transparency to the OTC derivatives markets. The service, launched in response to this demand, has seen tremendous support from clearing members, said LCH.Clearnet in the release. Clearing members have been key in developing the offering in collaboration with LCH.Clearnet to ensure that the service is fully inline with market practices and meets the core requirements that have been determined by the industry and policy groups, stated LCH.Clearnet in the release.

The introduction of clearing brings greater protection to the CDS market, enabling market participants to benefit from reduced counterparty risk, straight through processing, post-trade anonymity, and a proven track-record in risk and default management. Initially, the CDS clearing service covers European indices, with the intention to expand the offering based upon market demand.

“This successful launch demonstrates our ability to deliver innovative OTC clearing solutions across LCH.Clearnet Group, the global leader in OTC clearing,” commented Christophe Hemon, chief executive, LCH.Clearnet SA, in the release. “The collaboration and the support of market participants have been critical in the development of this service and we look forward to working with them to enhance our clearing offering,” further stated Hemon, in the release.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio