BAML joins CME swaptions clearing service

CME Group is seeing increased client interest in voluntary swaptions clearing. 

Bank of America Merrill Lynch (BAML) has become the latest clearing member for CME Group’s interest rate swaptions clearing service.

BAML joins five other banks to clear the product, including Barclays, BNP Paribas, Credit Suisse, Citi and RBS.

“We anticipate that cleared swaptions will become an important tool for clients and dealers alike in managing margin costs and credit exposures,” says Mike Stanley, global head of XVA and co-head of global non-linear trading, BAML.

The announcement from the US follows a recent statement from CME Group’s head of financial and OTC products, Sean Tuffy, on its third quarter earnings call that it has taken on two new clearing members following the go-live on the initial margin rules for uncleared derivatives on 1 September.

Banks and buy-side firms have increased demands for more derivatives products to be centrally cleared as a means to avoid higher capital costs.

Speaking to The TRADE Derivatives last month Agha Mirza, global head of interest rate products at CME Group, said it is seeing increased interest from clients for voluntary swaptions clearing. 

“In terms of actual activity we have seen two additional clearing members and a few ceremonial swaptions trades that market participants have executed to work through the end-to-end process,” Mirza said.