LCH.Clearnet Group Ltd., owner of the world’s largest interest-rate swaps clearinghouse, said it now clears credit-default swaps internationally, expanding its two- year old domestic French service.
LCH.Clearnet said in a statement that its CDSClear service will work with 10 international banks, including Citigroup Inc., Deutsche Bank AG and HSBC Holdings Plc, in addition to four French banks. It clears Series 5 and above of the Markit iTraxx Europe, HiVol and Crossover indexes, and will introduce single- name clearing later this year, subject to regulatory approval.
Clearinghouses operate as central counterparties for every buy and sell order executed by their members, who post collateral, reducing the harm from a trader’s default. Credit swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.
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