UPDATE: SEC OKs ICE Clear Europe, Eurex To Clear CDS
July 23 2009 - 7:09PM
Dow Jones News
The U.S. Securities and Exchange Commission said Thursday it has
approved special exemptions to allow ICE Clear Europe Limited and
Eurex Clearing AG to operate as clearinghouses for credit-default
swaps.
The exemptions will essentially allow the clearing members of
these two European-based clearinghouses to clear credit-default
swaps on behalf of their U.S. affiliates or U.S.-based
customers.
"Today's actions represent an additional piece in the
Commission's ongoing efforts, in coordination with other
regulators, to promote central clearing as part of a regulatory
framework for credit-default swaps," said SEC Chairman Mary L.
Schapiro.
The announcement comes as regulators both in the U.S. and Europe
are pushing for ways to reduce systemic risk posed by
over-the-counter derivatives trading. Critics blame
over-the-counter derivatives, particularly credit-default swaps,
for contributing to the financial crisis.
In the U.S., the Obama administration is urging Congress to pass
new laws that would force all standard over-the-counter derivatives
to be processed through clearinghouses, which guarantee trades.
ICE Clear Europe, owned by IntercontinentalExchange Inc. (ICE)
and Eurex are now the fourth and fifth clearing platforms to
receive a green light from the SEC for credit-default swap
clearing, respectively.
The SEC has also approved clearing platforms for ICE Trust, CME
Group (CME) and LCH.Clearnet. ICE Trust is currently the only
operable clearinghouse for credit-default swaps in the U.S.
The exemptions granted for all five clearinghouses are
temporary. But in the long run, such exemptions may help open up
cross-border competition among multiple credit-default swap
clearinghouses as more continue to open and offer clearing for a
broader array of products.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634;
sarah.lynch@dowjones.com