US derivatives regulator the Commodity Futures Trading Commission (CFTC) has authorised global central counterparty (CCP) LCH.Clearnet to clear instruments as a derivatives clearing organisation (DCO).
This week, the Commission issued an order granting LCH.Clearnet the right to clear certain derivatives as a DCO, including credit default swaps (CDS).
In a statement, the CFTC said: “Subject to the terms and conditions of the order, LCH.Clearnet is authorised to provide clearing services for credit default swaps and such other swaps that the Commission determines [it] is eligible to clear.”
LCH.Clearnet, which was acquired by the London Stock Exchange Group last year, is most active in interest rate swaps, clearing a sizeable portion of rates derivatives globally, and is attempting to expand its CDS clearing services.
In July, the CCP was given permission to begin clearing CDS products for its US members while its application for DCO status with the CFTC was pending.
The firm will look to expand its US operations as global regulatory change occurs in the US altering how swaps are traded and cleared in the wake of the financial crisis.