US bank branches in Australia will be allowed to use the derivatives clearing house ASX Clear (Futures) in order to clear Australian and New Zealand dollar-denominated interest rate swaps. The Australian Securities Exchange (ASX) expects to provide full operational support for this business during the second quarter of 2014.
The widening of this clearing service follows the receipt by ASX, the owner of the clearing house, of regulatory relief from the US Commodity Futures Trading Commission (CFTC).
The new CFTC relief complements the transitional relief from the European regulator that has been in place since September 2013. That allows European banks in Australia to directly use ASX’s OTC derivatives clearing service.
ASX launched its dealer-to-dealer OTC derivatives clearing service on 1 July 2013. Eight major domestic and global banks qualified as ‘Foundation Customers’, which currently account for 80 to 90% share of the Australian dollar OTC interest rate derivatives market, the size of which is approximately $15 trillion per year. The OTC derivatives clearing service will be extended to Australian clients in April 2014.