UPDATE:NYSE Euronext, LCH.Clearnet Downplay CDS Clearing Rift
February 18 2009 - 11:22AM
Dow Jones News
NYSE Euronext (NYX) and London-based clearinghouse LCH.Clearnet
on Wednesday downplayed perceptions of a growing schism over their
respective plans to clear credit derivative trades.
In a statement, the two companies emphasized their commitment to
clearing credit-default swaps via NYSE Euronext's BClear platform,
their joint effort that went online in late December and remains
the sole functioning CDS clearing service.
While 31 market participants are planning or implementing
connections to the BClear CDS clearing service, NYSE Euronext has
yet to see any activity on the platform, according to an exchange
spokesman.
On Friday LCH.Clearnet revealed plans to develop a new,
Europe-focused clearinghouse for the $30 trillion credit default
swap market, to be operated by Paris-based LCH.Clearnet SA,
throwing into question its existing partnership with NYSE
Euronext.
The two companies stated Wednesday that LCH.Clearnet's plans to
establish a Eurozone CDS clearinghouse are "complementary" to the
existing partnership with NYSE Euronext.
The firms said they will work together to "deliver synergies for
all CDS clearing customers" across both services, although the
nature of those synergies will depend on LCH.Clearnet firming up
details of its CDS clearing solution.
LCH.Clearnet currently plans to introduce its swaps clearing
service by the end of the year; the clearinghouse has yet to
divulge which credit derivatives products it will clear.
NYSE Euronext's relationship with LCH.Clearnet has been in flux
over recent months, as the trans-Atlantic exchange operator will
transfer clearing of its NYSE Liffe derivatives products onto its
new LiffeClear platform in the coming months.
Under the terms of an agreement forged last fall, LiffeClear
will serve as central counterparty to trades in those markets, with
LCH.Clearnet maintaining risk management and day-to-day clearing
processes.
LCH.Clearnet continues to clear all of NYSE Euronext's European
cash equities products.
Eurex, the derivatives arm of Deutsche Boerse (DB1.XE), also
plans to launch CDS clearing for European markets by the end of the
first quarter.
In the United States, derivatives exchanges CME Group Inc. (CME)
and IntercontinentalExchange Inc. (ICE) are preparing their own
platforms.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com