Following its launch on 9 March, IntercontinentalExchange’s clearing counterparty (CCP) for the credit default swap (CDS) market, ICE Trust, has cleared US$71 billion of CDS index contracts, says Dirk Pruis, president and chief operating officer of the CCP. ICE Trust was the first CCP to clear CDS transactions in the US market, as it gained regulatory approval from the Federal Reserve and the Securities and Exchange Commission (SEC) to launch a week before rival CME Group’s CCP offering.
Pruis hopes the next few months will see even greater volumes for the CCP: “Following the limitations on volume recommended by regulators during this initial phase, we anticipate a solid ramp in activity in the coming weeks as we continue to actively work with both buy and sell side institutions in expanding participation in ICE Trust.”
He reckons the first month represents an important milestone for the financial markets in reducing systemic risk due to increased transparency around clearing of these instruments. During its first four weeks, ICE Trust cleared 613 transactions totalling US$71 billion of notional value, and resulting in US$12.7 billion of open interest.