LCH.Clearnet has integrated its derivative margin calculator with new swap execution facility (SEF) Bloomberg, as the clearing house prepares to support the new venue type.
The central counterparty’s SwapClear Margin Approximation Risk Tool (SMART), which allows users to calculate collateral requirements for swaps clearing, will now be available on Bloomberg terminals.
Under the US’ Dodd-Frank Act, OTC derivatives trades need to be traded on an exchange-like venue, known as SEFs, and centrally cleared through a central counterparty. The rules mean market participants will need to post initial and variation margin.
Daniel Maguire, head of SwapClear US, LCH.Clearnet’s interest rate swaps clearing service, said market participants were keen to understand margin requirements before execution and post-execution in real-time.
“Embedding [SMART] into an execution venue like Bloomberg is pretty useful for them,” he said. “This is now the first time you can use one screen to do all pre-trade, trade and post-trade activity.”
“We are open to exploring the service with other execution venues as well.”
Bloomberg is the first organisation to receive provisional approval to become a SEF by the Commodity Futures Trading Commission. Other applicants awaiting approval include TeraExchange, GFI, MarketAxxess, Truex and Tradeweb.
“Investors can now easily calculate the capital they need to clear their swap portfolios on the same platform they use for analytics, trade execution and access to clearing,” Bloomberg’s global head of product, Ben Macdonald, said.
SMART is integrated with Bloomberg’s multi-asset class analytics and trading platforms. Bloomberg Professional service subscribers will be able to access the tool to simulate their portfolio’s exposure to risk and perform real-time margin approximations, prior to clearing.