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Competition intensified on Tuesday for potentially lucrative clearing of over-the-counter interest-rate derivatives as CME Group Inc. (CME) announced plans to cut clients' costs on trades they perform away from exchanges, while Newedge Group became the first major brokerage to enter the fray.

Exchanges and brokerage firms hope to capitalize on new regulations on both sides of the Atlantic that are pushing traders to clear more business previously done on a bilateral basis.

Newedge said it will become the first independent futures commission merchant to guarantee interest-rate swaps, in a joint venture with shareholders Societe Generale SA (GLE.FR) and Credit Agricole SA (ACA.FR) that is expected to start in the second quarter.

Beginning May 7, CME will offer to its member firms portfolio-margining of over-the-counter interest-rate swaps, Treasury, and Eurodollar futures. Margins or collateral required to guarantee trades will be charged based on a market participant's entire portfolio, rather than for an individual product. CME estimated that certain portfolios will produce savings of up to 85%.

Initially, CME will provide portfolio margining only to its member firms. Regulatory approval is needed before the derivatives exchange offers the benefit to its broader customer base.

-By Howard Packowitz, Dow Jones Newswires; 312 750 4132; howard.packowitz@dowjones.com

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