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A-Team Insight Blogs

LCH.Clearnet’s OTC SwapClear Service Clears One Millionth Trade

SwapClear, LCH.Clearnet Limited’s OTC interest rate swap clearing service, has cleared its millionth trade, taking the notional value of trades in SwapClear to US$206 trillion.

Launched in 1999, SwapClear currently clears 64% of the global interbank interest rate swap market and the range of products cleared has been extended to include overnight index swaps of up to two years in four currencies and interest rate swaps in tenors of up to 30 years in up to 14 currencies.

Joe Reilly, director, SwapClear, LCH.Clearnet said: “SwapClear’s continued success demonstrates the market demand for effective and robust clearing services for vanilla OTC products. For 10 years, SwapClear has successfully mitigated risk and provided operational efficiencies in the OTC interest rate swap market.”

The resilience of SwapClear’s default management process was demonstrated in September 2008 when it successfully handled Lehman’s $9 trillion interest rate swap default. The highly effective default management process ensured that 66,390 trades were hedged and auctioned off to other clearing members in a timely fashion and that the default was managed well within the margin held and with no recourse to the default fund.

Further developments are planned for SwapClear, including extensions to tenors to up to 50 years in some of the 14 currencies currently cleared and a service tailored for the buy-side.

LCH.Clearnet Limited is both a Financial Services Authority (FSA) Recognised Clearing House and a Commodity Futures Trading Commission (CFTC) registered Derivatives Clearing Organisation (DCO).

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