OTC derivatives clearing
n News
mandate so far,” she said,
adding that relevant deadlines related to major swap
participants and category
one firms, many of which
were already prepared to
support CCP clearing for
OTC derivatives.
The report, titled ‘OTC
Derivatives Clearing 101:
Making Things Clear’, normalised cleared IRS trade
data from the three CCPs
and analysed global data
from the International
Derivatives and Swaps
Association (ISDA).
The global data from
ISDA showed a doubling
of global cleared swaps
despite actual trading volumes plateauing in recent
years, O’Shea said.
“The figures we analysed
showed global trading volumes in OTC derivatives
instruments trending down
between 2011 and 2012, but
the volume of trades passing
through central clearing has
increased for the IRS market
as Dodd-Frank deadlines hit
the US market,” she said. n
Volume data for interest rate swaps (IRS) transactions cleared through
central counterparties
(CCPs) has shown US
market participants are
successfully adapting to the
new clearing mandate.
A report from consultancy Aite Group measuring the volume of cleared
IRS and credit default swap
(CDS) trades through LCH.
Clearnet-owned SwapClear,
CME Group and
IntercontinentalExchange
(ICE) shows significant
growth as the market
adapted to Dodd-Frank Act
clearing rules.
Cleared IRS, which
constitutes the majority of
OTC derivatives trades, registered particular growth,
while clearing volumes in
CDS trades experienced
more gradual growth.
The CME’s US clearing
volume jumped 221% from
US$1.4 trillion notional
outstanding in January to
US$4.5 trillion for May.
SwapClear’s US operations, which began at
the start of the year, had
increased to US$2 billion
of IRS in May. Meanwhile,
the CCP’s global operations
had experienced an almost
doubling in volume, from
US$7.6 trillion in January
to US$14.5 trillion in May.
ICE Clear Credit, however, achieved mild first
half volume growth, with
January and May registering around US$1.6 trillion
in cleared OTC derivatives,
due in large part to less
robust volumes of CDS
trades compared to IRS.
Dodd-Frank’s category
one deadline for OTC
derivatives clearing, which
applied to major swap participants trading of IRS and
credit default index instruments occurred on 11
March, while the category
two deadline – which covered most buy-side firms
– occurred on 9 June.
Positive sign
“The response to the various US clearing deadlines
has been fairly measured
as firms prepare clearing
operations ahead of the
deadlines,” said report coauthor and senior analyst
for Aite, Virginie O’Shea.
“This suggests the market has been successful in
adjusting to the clearing
Cleared IRS volumes show
US market adjustment
n——Data from US clearing houses suggests
successful implementation
n “The market has
been
successful in
adjusting to
the clearing
mandate so
far.”
Virginie O’Shea,
senior analyst,
Aite Group
