IntercontinentalExchange Launches European CDS Clearinghouse
July 29 2009 - 9:33AM
Dow Jones News
IntercontinentalExchange Inc. (ICE) expanded its credit
derivatives clearing service to Europe Wednesday, launching with
the support of 10 major Wall Street banks.
The Atlanta-based exchange began clearing index-based
credit-default swap contracts this week via its ICE Clear Europe
arm, just ahead of European banks' self-imposed deadline of July 31
for clearing their credit derivatives trades.
Initial clearing members in the venture include Bank of America,
Barclays, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC,
J.P. Morgan, Morgan Stanley and UBS.
The support of those banks, which account for most credit
derivatives trading, has proved key to ICE's success in the U.S.,
where its ICE Trust platform remains the sole functioning CDS
clearing platform.
The European credit derivatives market is also being targeted by
Eurex, the derivatives unit of Deutsche Boerse (DB1.XE), which
unveiled its Eurex Credit Clear platform last week.
Chicago-based CME Group Inc. (CME) also has plans to clear
credit derivatives in Europe, though its U.S. platform has stalled
as the exchange operator works to secure bank support for the
venture.
NYSE Euronext (NYX) was the first exchange company with a
European CDS clearing solution, launched in conjunction with
LCH.Clearnet in December 2008, but that effort is being reviewed by
the exchange after it failed to attract any business since its
launch.
ICE remains the most successful in the race to clear
over-the-counter credit products. Since launching in March, ICE
Trust has cleared $1.6 trillion in North American CDS indexes.
That platform, which initially limited participation to major
banks, will soon introduce protections for buy-side
participants.
-By Jacob Bunge, Dow Jones Newswires; (312) 750-4117;
jacob.bunge@dowjones.com