NASDAQ OMX has announced the launch of a pilot project to clear interest rate swaps in Swedish kroner. Working with SEB and the Swedish National Debt Office, the first trades were cleared on Monday.
NASDAQ OMX eventually aims to build a full scale IRS clearing house for Swedish kroner (SEK), although no timescale has yet been set.
Previously, SEK denominated IRS, a market with an average daily turnover of 30 billion SEK, have been collateralized and settled bilaterally.
Many firms have been preempting the desire of U.S. and E.U. regulators to push OTC derivatives through central clearing. LCH.Clearnet recently announced it would be offering its SwapClear IRS clearing service to U.S. clients by the end of 2010.
Through the IRS central counterparty clearing offering, NASDAQ OMX is building a Nordic clearing house that covers all Fixed Income instruments, says Erik Theden, head of Nordic Fixed Income and President NASDAQ OMX Stockholm. This service will reduce the administrative burden and, more importantly, bring with it a reduction of counterparty risk for market participants and thereby improve financial stability. The ability to net multiple post-trade transactions through a central counterparty also allows our market participants to reduce collateral significantly.