UPDATE: ICE Debuts European Swaps Clearing
29 Luglio 2009 - 5:00PM
Dow Jones News
IntercontinentalExchange Inc. (ICE) expanded its
credit-derivatives clearing service to Europe Wednesday, launching
with the support of 10 major dealer banks.
The Atlanta-based exchange operator began clearing index-based
credit-default-swap contracts this week via its ICE Clear Europe
arm, just ahead of European banks' self-imposed deadline of July 31
for clearing their credit-derivatives trades.
Clearinghouses, which serve as central counterparties to trades,
have emerged as a focus for regulators intent on reducing risk in
over-the-counter markets such as credit derivatives, and dealer
banks on both sides of the Atlantic have moved to clear more of
their swaps transactions.
Initial clearing members in the ICE's European
credit-derivatives venture include Bank of America Corp. (BAC),
Barclays PLC's (BCS) Barclays Capital, Citigroup Inc. (C), Credit
Suisse Group (CS), Deutsche Bank (DB), Goldman Sachs Group Inc.
(GS), JPMorgan Chase & Co. (JPM), Morgan Stanley (MS) and UBS
AG (UBS).
The support of dealer banks, which account for most
credit-derivatives trading, has proved key to ICE's success in the
U.S., where its ICE Trust platform remains the sole functioning CDS
clearing platform.
ICE Chief Executive Jeffrey Sprecher has said he expects those
banks' support to translate across the Atlantic, but the European
credit-derivatives market is also being targeted by Eurex, the
derivatives unit of Deutsche Boerse (DB1.XE), which will begin
clearing transactions via its Eurex Credit Clear platform on
Thursday.
A number of dealer banks already have connected to the Eurex
Credit Clear platform and more are expected to sign on in the
coming weeks, according to a Eurex spokesman, who declined to name
participants.
Eurex Credit Clear will initially handle both
credit-default-swap indexes and 17 single-name contracts, focused
on the utility sector.
ICE Clear Europe is working with the U.K. Financial Services
Authority, which approved this week's launch, and expects to begin
clearing single-name credit derivatives in the near term.
Chicago-based CME Group Inc. (CME) also has plans to clear
credit derivatives in Europe, though its U.S. platform has stalled
as the exchange operator works to secure bank support for the
venture.
NYSE Euronext (NYX) was the first exchange company with a
European CDS clearing solution, launched in conjunction with
LCH.Clearnet in December 2008, but that effort is being reviewed by
the exchange after it failed to attract any business since its
launch.
LCH.Clearnet looks to introduce its own credit derivatives
clearing facility near the end of the year.
ICE Clear Europe President Paul Swann will oversee the
exchange's European credit-derivatives clearing service, which will
maintain a risk pool and guaranty fund separate from ICE's European
futures business.
Suzanne Hubble, a former JPMorgan executive focused on European
credit trading, was hired to lead business development for the new
service.
ICE remains the most successful in the race to clear
over-the-counter credit products. Since launching in March,
U.S.-based ICE Trust has cleared $1.6 trillion in North American
CDS indexes.
That platform, which initially limited participation to major
banks, will soon introduce protections for buy-side participants
such as pensions and hedge funds; European customers will also be
covered, according to ICE.
Over-the-counter credit products are estimated to make up about
6% of ICE's revenue, according to the company.
ICE shares were slightly higher at $91.70 in midmorning
trade.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com