The European post-trade arm of derivatives exchange operator IntercontinentalExchange (ICE) will offer client clearing for European credit default swaps (CDS) from October, after receiving regulatory approval.
ICE Clear Europe is expected to offer the client clearing solution from 7 October for 43 European index and 121 corporate single name CDS instruments, after both US and UK authorities gave the go-ahead.
The firm’s buy-side clearing solution will include trade-date clearing of index and single name CDS and provide for segregation of customer funds.
“As the regulatory environment continues to evolve in Europe, we are pleased to extend the benefits of our leading European CDS clearing solution to clients and end users,” said Paul Swann, president, ICE Clear Europe. “We have worked extensively with regulators, the dealer community and clients to develop a clearing solution that brings further transparency and reduces operation and systemic risk,” he said.
ICE will leverage its established clearing of the products, which to date totals 1.38 million cleared CDS trades globally, with US$42.9 trillion in gross notional value for North American and European CDS instruments.
The regulatory push for central clearing of OTC derivatives such as CSD products through rules within the US Dodd-Frank Act and the European market infrastructure regulation continue to come into force. The rules are part of a wider framework to reform the derivatives industry led by G-20 countries to reduce the systemic risk of OTC derivatives trading.