IntercontinentalExchange Inc. (ICE) will be operationally ready to clear European credit derivatives trades this week and will begin back-loading banks' existing swap positions in the coming weeks, an official said Tuesday.

The imminent expansion of ICE's clearing business for credit default swaps comes as ICE steps up efforts to clear a broader range of credit derivatives, following U.S. regulators' call for participants to route more over-the-counter trades through exchange-backed clearinghouses.

In Europe, Atlanta-based ICE will clear credit derivatives trades through its London-based ICE Clear Europe facility, which launched last fall and is in the final stages of securing regulatory approval to handle credit derivatives, according to Dirk Pruis, president of ICE's U.S. credit derivatives clearinghouse.

Clearing, the process in which a central counterparty serves as the buyer to every seller and the seller to every buyer, has emerged as a key regulatory focus as financial authorities work to rein in over-the-counter markets.

Last week, the U.S. Treasury announced a plan that would require market participants to clear trades in standardized over-the-counter derivatives, along with tougher reporting requirements. European regulators are expected to follow with similar initiatives.

By expanding the universe of OTC instruments that can be handled by their clearinghouses, derivatives exchanges like ICE and Chicago's CME Group Inc. (CME) stand to benefit as authorities determine which products must be cleared to reduce risk and increase transparency in the market.

Speaking at a Tuesday event organized by the Futures Industry Association, Pruis said ICE will offer clearing for single-name credit default swaps - products insuring against the default of specific companies - in the U.S. and Europe starting in the third quarter of this year.

Currently, ICE is clearing trades in the more standardized credit default swap indexes.

In Europe, Pruis said ICE will be operationally ready to clear iTraxx credit default swap index trades in the next few weeks, ahead of a July target date set by European dealer banks to begin clearing their credit derivatives business.

ICE has taken the lead in clearing over-the-counter credit instruments following its purchase of The Clearing Corp., a Chicago-based entity owned by a consortium of banks, which thereafter signed on as clearing members of the exchange's U.S. credit derivatives clearinghouse ICE Trust.

Since launching in early March, ICE Trust has cleared about $586 billion in notional credit derivatives trades.

Rival CME has developed its own U.S. offering with hedge fund firm Citadel Investment Group called CMDX, but that platform has yet to launch as CME works to secure support from a critical mass of sell- and buy-side participants.

At launch, CMDX is set to begin clearing credit default swap index trades as well as more than 500 single-name constituents of those indexes.

Tim Doar, managing director of risk management for CME, said Tuesday that CMDX will also look to clear credit derivatives on sovereign debt, but it won't handle credit default swaps on subprime debt or collateralized debt obligations.

CME has plans to launch a European version of CMDX, where it will compete against ICE as well as Deutsche Boerse (DB1.XE), LCH.Clearnet SA and NYSE Euronext (NYX).

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com