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