Barclays says it has cleared more than $1 trillion notional of interest rates, credit and FX over-the-counter (OTC) derivatives transactions on behalf of its clients following a significant increase in clients voluntarily clearing in recent months.
Barclays, which cleared the first client CDS transaction and the first client interest rates transaction in December 2009, says it has been investing in its clearing business to prepare for mandatory centralized clearing ahead of regulatory deadlines.
The $1 trillion of cleared notional transactions includes some 11,000 derivatives contracts executed by regional banks, investment managers, pension funds, insurance, hedge funds and government agencies across the world. The transactions, covering eight currencies, four high-yield indices and nine investment grade indices, were cleared at LCH.Clearnet, CME Group or IntercontinentalExchange.
Barclays has a very strong commitment to helping drive industry solutions significantly ahead of deadlines for regulatory change, and to providing the best possible clearing capabilities, says Michael Yarian, head of Agency Derivatives Services. We are therefore very pleased to have achieved this milestone. The investments that we have made in our platform have allowed us to provide scale quickly and easily for clients who are voluntarily moving to a centrally-cleared business model.
Ray Kahn, head of OTC Derivatives Clearing, adds: While this volume of clearing is significant, we believe it is only a very small portion of what will be cleared as regulatory deadlines approach and more clients move to a centrally-cleared model. To successfully achieve the automation and straight-through processing needs of central clearing, industry participants need to make significant investments in infrastructure and testing. Our work over the past two years allows us to provide practical solutions to our clients.
Barclays Agency Derivatives Services business which incorporates OTC derivatives clearing, futures execution and clearing, foreign exchange prime brokerage, and credit and rates intermediation is part of the firms Prime Services business.
A recent white paper claims buy-side firms can take advantage of Dodd-Frank, which mandates central clearing, to assess their readiness for credit risk reforms and implement comprehensive risk management.
(CG)