Market operator Nasdaq OMX Nordic will clear Swedish-krona denominated interest rate swaps for end-client trades from February, as new regulation in Europe will soon send over-the-counter (OTC) derivatives trades through clearing houses.
Nasdaq OMX Nordic has an average IRS daily clearing volume in excess of US$20 billion and has cleared IRS trades between participating members since November 2011, but this will be the first time the service is offered to end-clients.
“We’re confident that cleared interest rate swaps will be a strong addition to our current product suite of cleared interest rate derivatives on the Nordic market,” Jens Henriksson, head of Nordic fixed income at Nasdaq OMX, said.
“The first stage to expand the product scope includes interest rate swaps, forward rate agreements and overnight index swaps denominated in Swedish krona. The next phase is to provide the market with clearing of interest rate swaps and related derivatives denominated in Danish kroner, Norwegian Krone and euro,” Henriksson said.
Nasdaq OMX Nordic’s legal and technical framework to clear interest rate swaps has been established and the technical system to introduce the new instruments was upgraded in November. The exchange operator also teamed up with MarkitWire this year to support its existing infrastructure for the OTC market.
In November, European clearing house Eurex introduced the clearing of IRS instruments as CCPs seek to extend services to buy-side clients ahead of regulatory changes in Europe.
Europe-wide rules on derivatives clearing come into force under the European market infrastructure regulation (EMIR), which was agreed upon earlier this year. It will mandate the clearing of OTC derivatives through CCPs and will come into effect in 2013.