The Singapore Exchange (SGX) has expanded its AsiaClear business with the launch of a new clearing service for OTC traded financial derivatives.
Starting with the clearing of interest rate swaps denominated in Singapore and US dollars, the central counterparty's new service is due to go live by October 2010, pending regulatory approval.
The AsiaClear service is designed to support global regulatory measures to reduce systemic risks and enhancing risk management standards across the financial sector. According to SGX, it aims to offer global financial institutions and Singapore banks reliable risk mitigation capability to manage post-trade credit and counterparty risks.
“Singapore is Asia's choice location for trading and post-trade activity for OTC financial derivatives,” said Muthukrishnan Ramaswami, president of SGX. “We are pleased to offer banks access to a wider CCP network and prudent risk management, which facilitate building businesses with a global scale.”
To date, ten banks have initiated membership processes, including Barclays Bank, Citibank, Credit Suisse, DBS Bank, Duetsche Bank, HSBC, Oversea-Chinese Banking Corporation, Royal Bank of Scotland, Standard Chartered Bank and United Overseas Bank.
The move follows the launch of pan-Asian multi-product commodity and currency derivatives exchange the Singapore Mercantile Exchange earlier this month and SGX's recent announcement that it will start trading American depositary receipts of 19 major Asian companies, from late October 2010.