CORRECT:Barclays And Citadel Announce E-Traded,Cleared Rate Swap

Barclays Capital said Friday it has entered two interest rate swaps with Citadel LLC on Bloomberg's fixed-income trading platform, clearing one through CME Clearing and the other through LCH.Clearnet's SwapClear.

The development is another sign of the $583 trillion off-exchange swaps market moving toward seamless electronic execution and central clearing.

Barclays acted as the execution dealer on Citadel's trade via its BARX trading platform, and was also the clearing agent putting the trade into each clearinghouse.

Dealers are increasingly touting their swap execution and processing capabilities as the industry faces an overhaul under the Dodd-Frank law passed last summer in the U.S., and similar efforts in other global financial centers.

Two key tenets of that law are that certain swaps have to be traded on open electronic platforms for improved price transparency, and cleared centrally so that regulators can see risks building up in the system. U.S. regulators are expected to finalize the new rules stemming from Dodd-Frank later this year.

"Electronic execution and real-time clearing of swaps for all participants fulfills a core objective of the Dodd-Frank bill by ensuring that our markets are open, transparent and competitive," said Gerald Beeson, chief operating officer of Citadel, in a statement.

It isn't the first such trade of its kind; a U.S.-based asset manager executed an interest rate swap through rival execution platform Tradeweb and cleared it through CME Clearing in November, using Deutsche Bank as both executing dealer and clearing agent.

But this transaction is unprecedented for Barclays and Bloomberg, because it is the first time Bloomberg's platform has simultaneously handled a fully electronic rate swap cleared through CME. From the point of execution into clearing, there was no requirement to manually manage any aspect of the trade.

Citadel and another unnamed U.S. asset manager recently did a similar electronic trade through Bloomberg and CME Clearing, using Barclays as both its execution and clearing dealer, but that was a credit default swap, not an interest rate swap.

-By Katy Burne, Dow Jones Newswires; 212-416-3084; katy.burne@dowjones.com.

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