Anglo-French central counterparty LCH.Clearnet has been given regulatory approval to clear credit default swaps (CDSs) for asset managers through subsidiary CDSClear in Europe.
The clearinghouse will extend clearing for the instruments currently offered to members, such as large banks and brokers, to clients, such as buy-side firms, regional banks and corporate treasuries.
The clearing service will offer an asset tagging solution, which allows clearing members to track which of their client-related non-cash collateral could be transferred in the event of a default, and aims to streamline legal documentation between counterparties.
Barry Hadingham, head of derivatives and counterparty risk at Aviva Investors, welcomed the new service, saying the market had been looking for a European CDS clearing house for non-US clients.
"We are particularly pleased to see that the solution offers improved portability conditions and easy to navigate legal arrangements," he said.
LCH.Clearnet also expects to soon be able to offer a single name CDS clearing service, subject to regulatory approval.
Earlier this month, LCH.Clearnet announced it would clear CDSs for US clearing members, after a US regulatory decision to recognise European derivatives rules was struck.
The company also has a pending application to the Commodity Futures Trading Commission to become a registered derivatives clearing organisation, a decision on which is expected towards the end of the year.