LCH.Clearnet’s SwapClear Expands Compression Offering
New Enhancements Deliver Greater Efficiencies and Flexibility
LCH.Clearnet Limited (“LCH.Clearnet”), the global clearing house, announced today it has expanded its compression offering to include multilateral compression via SwapClear, its market-leading interest rate derivatives clearing service. Multi compression is in addition to SwapClear’s existing Solo and Duo compression capabilities and enables multiple members to simultaneously compress their trades with each other.
Compression reduces the number of trades and notional outstanding by terminating contracts with offsetting positions. This allows market participants to reduce their counterparty credit exposure and capital costs, as well as increase their operational efficiency through lower administrative and legal expenses. In 2013, SwapClear compressed over $83 trillion through its proprietary and TriOptima’s compression offering, bringing significant benefits to its members and clients.
Daniel Maguire, Global Head of SwapClear, said: “The limited effectiveness of current netting measures has caused notional outstanding to be a large driver of regulatory capital holdings for some firms. SwapClear’s compression offering enables firms to reduce notional outstanding and better manage their regulatory capital requirements, with the benefit of simplified operations and lower overheads.”
Zar Amrolia, Co-Head of Fixed Income and Currencies at Deutsche Bank, said: “Trade compression is an important tool which provides operational efficiencies and allows us to reduce our counterparty credit exposure, which in turn frees up capital that can be deployed elsewhere.”
SwapClear will offer additional innovative enhancements to its compression offering in 2014, including future cash flow netting, blended rate compression and portfolio de-linking; subject to regulatory approval. Future cash flow netting will allow trades with different maturities, but the same future cash flow to be compressed. Blended rate compression will enable trades with different coupons, but otherwise identical terms, to be compressed. Portfolio de-linking will give members the ability to manage trade compression independent of other counterparties. These service enhancements will allow members to compress a greater percentage of their portfolios.
For further information:
Liz Bruce, Fitzroy USA, Tel + 1 212 498 9197
Kamyar Naficy, LCH.Clearnet, UK, Tel + 44 (0) 20 7426 3787
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The LCH.Clearnet Group is a leading multi-asset class and multi-national clearing house, serving major exchanges and platforms as well as a range of OTC markets.
LCH.Clearnet’s world-class risk management framework provides exceptional levels of protection to international markets, as has been proven through the management of recent defaults. As demand for robust clearing services continues to grow, LCH.Clearnet is committed to achieving the highest standards of risk management across all asset classes cleared.
LCH.Clearnet is majority owned by London Stock Exchange Group (LSE.L), a diversified international exchange group that sits at the heart of the world's financial community.
SwapClear is LCH.Clearnet’s world leading over-the-counter interest rate derivatives (IRD) clearing service. With more than 139 market makers active in the interest rate swap market that clear through SwapClear and $507 trillion notional cleared, SwapClear provides both clearing members and buy-side clients with access to the deepest pool of liquidity with significant portfolio efficiencies. Over the past 14 years, SwapClear has maintained its leadership position, currently clearing over 85% of the cleared IRD market, in six products across 17 currencies. Since the introduction of buy-side clearing, more than $80 trillion notional has been cleared by the buy-side using the service, which is over four times that of the nearest competitor. SwapClear is committed to investing in its infrastructure and solutions to address evolving global regulations and the needs of its customers.