UPDATE: Goldman, BlackRock Complete E-Traded, Cleared Credit Swap

Goldman Sachs Group (GS) and $3.65 trillion asset manager BlackRock Inc. (BK) announced Thursday they have completed an index credit derivative trade along the lines of what was envisaged in the 2010 Dodd-Frank financial overhaul law.

It is Goldman's first swap trade with a client to be electronically executed and centrally cleared in the spirit of that law. The firm has conducted several trades in a manner largely consistent with the aims of the act with other dealer banks for some time.

The trade, referencing the CDX North America Investment-Grade Index administered by Markit, was executed on a trading platform run by Tradeweb, and was cleared through Chicago's CME Group. Other firms in the derivatives market, including Deutsche Bank, J.P. Morgan and Barclays Capital, have made similar announcements in recent months.

Goldman served as the clearing agent, routing the trade through to the CME clearinghouse for processing on its client's behalf. It also served as the executing dealer on the trade.

Clearing is when a central counterparty stands between trading parties, guaranteeing their contractual obligations in case a member of the clearinghouse defaults.

Under Dodd-Frank, standardized swaps will have to be traded on registered exchanges or other transparent platforms called "swap execution facilities." The majority of swaps will also have to be centrally cleared.

Tradeweb is considered one of the leading contenders to win "swap execution facility" status, although it is not yet possible to register as a SEF because regulators have not finished writing rules for the swaps market overhaul, as they were authorized to do under Dodd-Frank.

SEFs are expected to capture 10% to 15%, or $5 billion to $6 billion, of the banks' swaps revenue by 2013, according to a recent report by Morgan Stanley and consultancy Oliver Wyman.

Goldman is the latest in a string of Wall Street firms to be touting its capabilities in the derivatives clearing arena.

"This is the first end-to-end trade that we have conducted for a client from a likely SEF to clearing," said Jack McCabe, co-head of futures and derivative clearing services at Goldman, in an interview with Dow Jones Newswires.

He declined to comment on the trade itself, such as its size and direction.

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

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