ICE: Plans To Launch European Swaps Clearing In 1st Half Of 2009
February 19 2009 - 1:13PM
Dow Jones News
IntercontinentalExchange Inc. (ICE) plans to begin clearing
European credit default swap trades by July through a new entity
called ICE Trust Europe, the exchange announced Thursday.
ICE's proposal comes as European regulators call for a
Eurozone-based clearing solution for the swaps, which serve as a
kind of insurance against corporate defaults and trade in
over-the-counter markets.
Atlanta-based ICE welcomed those calls Thursday, saying in a
statement that the planned clearinghouse's separate guaranty fund
and margin accounts for credit derivatives will help reduce risk in
the estimated $30 trillion credit derivatives market.
"Our aim is to improve the soundness and transparency of the CDS
markets, regardless of physical or political borders," said Paul
Swann, president and chief operating officer of ICE Clear
Europe.
ICE Trust Europe will function within ICE Clear Europe, the
exchange's European clearing facility that launched in November and
is regulated by the U.K. Financial Services Authority.
Deutsche Boerse's (DB1.XE) derivatives unit, Eurex, is also
looking to clear CDS trades in Europe, with a platform slated to
launch by the end of the first quarter. London-based clearing firm
LCH.Clearnet last week announced its own plan to develop a swaps
clearinghouse by the end of 2009.
NYSE Euronext (NYX) and LCH.Clearnet currently are partnered in
the only functioning CDS clearing platform; that partnership will
continue as LCH.Clearnet develops its own platform, according to
officials.
However, this effort is based in London, a sticking point for
some European regulators who want a Eurozone-based solution.
Earlier Thursday, a group of nine dealer banks voiced their
support for central clearing of credit derivatives in a letter to
European Commissioner Charlie McCreevy.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com