ING Bank NV, Natixis SA and Rabobank NV are the latest banks to join SwapClear, LCH.Clearnets over-the-counter (OTC) interest rate swap clearing business. All three banks have commenced implementation and are expected to go live later this year.
Established in 1999, SwapClear enables swap dealers to reduce the risk and processing costs in the interbank interest rate derivatives market. In a unique approach, the interest rate swap community have worked with LCH.Clearnet for the last ten years, through OTCDerivNet, to develop and improve the market infrastructure for interest rates.
We are delighted to welcome the three banks who all are important participants in the market, says Joe Reilly, director of SwapClear, LCH.Clearnet. As firms increasingly look to minimise counterparty risk, we have seen a heightened awareness of the value of the SwapClear service to the market. With the industry we have built a highly successful OTC clearing model.
We consider clearing to be the most effective way forward for interbank interest rate derivative trading and expect to benefit greatly from the enhanced credit capacity and risk reduction that it will bring, says Gunter Fluyt, global head, Rates at ING Bank NV.
Counterparty risk reduction, with the freeing up of credit lines and resulting reduction of collateral together with more efficient use of our capital are the primary drivers for our decision to join SwapClear, says Tanguy Loreau, head of Derivatives Operations, Natixis SA.
SwapClear does what it says on the box: reduces counterparty risk, enhances straight through processing, saves capital and reduces the balance sheet, says Henk Rozendaal, global head of Interest Rate Derivatives, Rabobank NV. Joining SwapClear will enable us to develop our interbank swap business further and to benefit from the increasing flows of business with the other SwapClear members.
L.D.