Members of European
derivatives exchange NYSE Liffe can soon confirm and clear
bilateral interest rate futures through the firm’s Bclear service.
From 10 December,
members of the NYSE Euronext-owned market can clear pre-negotiated trades in
three-month euro (Euribor) futures, three-month sterling futures and long gilt
The exchange added
that it plans to further extend Bclear to accommodate market participants that execute
large interest rate trades, to help market participants ensure trade processing
is in line with new regulations.
Under the European
market infrastructure regulation, due to come into force at the start
of next year, OTC derivatives will be standardised where possible so they can
be traded on exchange-like platforms and centrally cleared. Reporting for all
swaps trades will also be made mandatory.
Using Bclear, firms
can effectively substitute over-the-counter interest rate futures for exchange-traded products,
letting them comply with the new swaps rules.
Trades submitted to
NYSE Liffe via Bclear must meet a minimum volume threshold and be priced at ‘fair
value’, in accordance with the service’s rules. NYSE Liffe members also benefit
from margin efficiencies through the fungibility of Bclear contracts with
existing fixed income contracts to create a single pool of open interest.
“With the regulatory
environment moving towards greater use of central counterparty clearing
services, NYSE Liffe is leading the way in supporting the fixed income trading
community with a new service through its Bclear franchise, which is an
innovative alternative for processing products currently traded off-exchange,”
said Finbarr Hutcheson, chief executive of NYSE