DOW JONES NEWSWIRES
IntercontinentalExchange (ICE) said it has begun operating its
clearinghouse for credit default swaps.
ICE had been awaiting approval from government regulators for a
credit derivatives clearing platform with Clearing Corp., which it
is acquiring. The effort will help lay claim to a share of what
many believe will be a huge market as investors try to unload the
high-risk securities.
ICE Trust's first trade clearing is expected to be completed
Monday, with additional positions handled over several one-week
cycles.
The effort is the nation's first operational clearinghouse for
CDS. The Securities and Exchange Commission's approval Friday of
ICE Trust marks a big step toward the U.S. government's efforts to
offer clearing for over-the-counter derivatives like the swaps,
which alone make up an estimated $27 trillion market.
Some critics contend the complex instruments have played a role
in the financial crisis. As evidence, they point to the
near-collapse of American International Group (AIG), which issued
credit-default swaps without having enough collateral to fulfill
the provisions in those contracts.
ICE shares rose 3.9% premarket to $63.45. The stock is down
nearly 55% the past nine months amid investor concern about slowing
trading-volume growth at exchanges.
-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136;
kevin.kingsbury@dowjones.com