Barclays Plc (BARC) said it has cleared more than $1 trillion in client swap trades at LCH.Clearnet Ltd., CME Group (CME:US) Inc. and Intercontinental Exchange (ICE:US) Inc. as customer demand for the service is strong ahead of a regulatory mandate.
The trades, since December 2009, included interest-rate, credit-default and currency swaps, the London-based bank said in an e-mailed statement today. Most swaps must be guaranteed with a clearinghouse, which requires collateral to back trades in an effort to reduce systemic risk, under pending regulations in the U.S. and Europe. In the U.S., the Dodd-Frank Act requirement for swaps clearing is expected to take effect next year.
“Over the past months, Barclays has seen a significant increase in clients voluntarily clearing, underscoring the heightened focus that buy-side clients are placing on central clearing,” the bank said in the statement.
The $1 trillion in notional value of the transactions have been executed in 11,000 trades with regional banks, investment managers, pension funds, insurance companies, hedge funds and government agencies, Barclays said.
“While this volume of clearing is significant, we believe it is only a very small portion of what will be cleared as regulatory deadlines approach and more clients move to a centrally-cleared model,” Ray Kahn, head of over-the-counter derivatives clearing, said in the statement.
LCH.Clearnet, based in London, owns the world’s largest interest-rate swap clearinghouse and clears credit-default swaps in its Paris subsidiary. CME Group, based in Chicago, offers clearing of interest-rate, credit-default and currency swaps. Atlanta-based Intercontinental Exchange owns the world’s largest credit swaps clearinghouse.
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