Members of European derivatives exchange NYSE Liffe can soon confirm and clear bilateral interest rate futures through the firm’s Bclear service.
From 10 December, members of the NYSE Euronext-owned market can clear pre-negotiated trades in three-month euro (Euribor) futures, three-month sterling futures and long gilt futures products.
The exchange added that it plans to further extend Bclear to accommodate market participants that execute large interest rate trades, to help market participants ensure trade processing is in line with new regulations.
Under the European market infrastructure regulation, due to come into force at the start of next year, OTC derivatives will be standardised where possible so they can be traded on exchange-like platforms and centrally cleared. Reporting for all swaps trades will also be made mandatory.
Using Bclear, firms can effectively substitute over-the-counter interest rate futures for exchange-traded products, letting them comply with the new swaps rules.
Trades submitted to NYSE Liffe via Bclear must meet a minimum volume threshold and be priced at ‘fair value’, in accordance with the service’s rules. NYSE Liffe members also benefit from margin efficiencies through the fungibility of Bclear contracts with existing fixed income contracts to create a single pool of open interest.
“With the regulatory environment moving towards greater use of central counterparty clearing services, NYSE Liffe is leading the way in supporting the fixed income trading community with a new service through its Bclear franchise, which is an innovative alternative for processing products currently traded off-exchange,” said Finbarr Hutcheson, chief executive of NYSE Liffe.