LCH.Clearnet is to extend its OTC interest rate swap clearing service, SwapClear, to the broader buy-side trading community.
The new client clearing service, scheduled to be launched in the second half of 2009, will be based on the current clearing model, but will have additional functionality to support the segregation of client portfolios and margin. Clients will be able to access the service through a SwapClear clearing member, thereby reducing their counterparty credit risk.
The move to improve risk management in the OTC derivative market comes after the US administration has indicated that regulation must be tightened.
Joe Reilly, Director of SwapClear, LCH.Clearnet said: This important development will help reduce systemic risk and improve market transparency. The broadening of SwapClears offering to include buy-side trading clients will significantly increase the proportion of important entities able to access clearing in the rates market. We are working hard with our membership to produce a solution that is supported both by the key liquidity providers in the market and the buy-side, thereby ensuring our offering is fully attuned to the whole markets needs.