GC Friday Interview: Daniel Maguire, Head of SwapClear U.S.

LCH.Clearnet has launched a U.S.-domiciled interest rate swap clearing service in the U.S. The service builds on its SwapClear Global Service. Daniel Maguire, head of SwapClear, talks about how the new service fits LCH.Clearnet’s long term expansion strategy

Describe the [business] structure of through which the new service will be delivered.

DM: The new U.S.-domiciled interest rate swap clearing service is part of LCH.Clearnet LLC, which is the U.S.-based clearing house of LCH.Clearnet Group Limited. The service is an expansion of LCH.Clearnet’s market leading SwapClear Global Service.

Comment on the significance of the U.S. market for your business. How is LCH.Clearnet perceived in this market? To what extent was the new service driven by client demand?

DM: The U.S. market is the largest capital market in the world and is an important part of LCH.Clearnet’s long-term expansion strategy. Our global model has been very successful in the U.S., and this new service is a direct response to client demand for a domestic clearing service that offers SwapClear’s risk, product, technology and operational capabilities.

What will you look to do differently from the competition?

DM: Clients clear through us to take advantage of SwapClear’s deep pool of liquidity in terms of both better execution, access to a large number of execution venues and the portfolio margining efficiencies that can be gained from our broad range of products and currencies.

How does the new service help your clients comply with the regulation?

DM: This service provides our clients with more choice as they move to comply with new regulations, including the adoption of central clearing.

What level of business do you expect to do in the next year, particularly given the regulatory change?

DM: As of June 10, the CFTC’s Category 2 deadline, SwapClear’s Global Service cleared 87% of all cleared interest rate swaps for buy-side clients, representing $38.8 trillion in cumulative client notional cleared. We expect this notional number to grow as more clients seek clearing services to meet regulatory requirements.

Do you have further plans for the U.S. market? What other markets would you look to add the new service/ other services to in the future?

DM: The U.S. is an important part of LCH.Clearnet’s long-term growth strategy. We will continue to explore ways to expand our U.S. offering and respond to client demand for robust risk management and unmatched liquidity.