LCH.Clearnet SA (LCH.Clearnet) has expanded its credit default swap clearing (CDS) service, CDSClear, to offer single-name CDS clearing.
The expansion provides the broadest European CDS portfolio coverage of any clearing house globally. European members and clients can benefit from significant capital efficiencies through risk offsets between 187 single-names and existing index products through Monte Carlo Simulation VaR based portfolio margining.
Gavin Wells, CEO CDSClear, said: “With the addition of these 187 index constituents we believe the market will benefit from significant efficiencies. As regulations and clearing commitments evolve, we will continue to work collaboratively with market participants to ensure they can clear with confidence.”
Simon Morris, Managing Director, Head of Credit Trading EMEA and Asia, Goldman Sachs said: “We are pleased to see LCH.Clearnet introduce clearing across the broadest range of cleared European single-name CDS. We welcome the increased margin efficiencies generated through portfolio margining offsets of these 187 eligible single-names with the indices already cleared alongside the 86 additional single names now introduced to clearing.”
Bill Stenning, Managing Director, Clearing, Regulatory and Strategic Affairs, Société Génerale said: "Portfolio margining is a key benefit of clearing for us, so we welcome the extension of single-names to CDSClear's already broad product set. The significant increase in the availability of European single name instruments eligible for clearing will undoubtedly be well-received by all market participants.”
Gavin Dixon, Global Co-Head Fixed Income Clearing, BNP Paribas said: “CDSClear’s launch, which delivers a wide array of single-name products, complements their existing index offering and provides our clients with the opportunity to clear their European CDS instruments on an individually segregated, portfolio margining basis.”
The launch of single-name clearing follows a series of achievements for CDSClear throughout the year. In July 2013 the service extended its reach to include European clients and US clearing members* following regulatory approval. European clients can benefit from improved portability conditions through our Asset Tagging solution. This solution allows clearing members to track which of their client-related non-cash collateral and positions can be “ported” (i.e. transferred) to another member in the event of a default, in line with EMIR requirements.
* US clearing members refers to members defined under Dodd-Frank as "US persons" who can now become direct participants of CDSClear, LCH.Clearnet SA's credit default swap clearing business, following the no-action relief from the CFTC.
