Industry Updates

Newedge extends clearing services to OTC interest rate swaps

Tuesday, September 04, 2012

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Opalesque Industry Update - Newedge, a global leader in multi-asset brokerage and clearing, has announced that it has been approved for membership to clear over-the-counter (OTC) interest rate swaps (IRS) at the Chicago Mercantile Exchange (CME).

Achieving authorization means Newedge is the first Futures Commission Merchant (FCM) and non-traditional OTC IRS swap dealer to offer central counterparty clearing of OTC interest rate derivatives.

“Change inevitably breeds opportunity," said Newedge CEO Nicolas Breteau. "The developing regulatory agenda has created the opening for Newedge to bring our world-class listed derivatives and OTC commodity swaps clearing expertise to the OTC IRS space. Membership of the CME is another important step forward towards fully realizing this opportunity. Strengthening our global platform, sharing our know-how, and offering true impartiality born of our independence, mean that we are well placed to help clients benefit from reduced counterparty risk, default protection, and capital efficiencies from cross-margining opportunities."

“We are pleased to welcome Newedge as an OTC IRS clearing member of CME,” said Kim Taylor, President, CME Clearing. “We strive to offer market participants a diverse pool of clearing membership, and we are focused on continuing to work with both the buy and sell-sides to provide capital and operational efficiencies to all market participants as they transition to central clearing.”

Newedge's move follows regulatory changes to the $441 trillion IRS market, where Dodd-Frank in the US and European Markets Infrastructure Regulations are paving the way for a shift in the bilateral OTC market towards increased central counterparty clearing (CCP), greater transparency, and reduced counterparty risk for the benefit of end customers.

A partnership with Societe Generale Corporate & Investment Banking (SG CIB) and Crédit Agricole Corporate and Investment Bank (CACIB) supports Newedge’s IRS Clearing initiative. Newedge’s OTC IRS clearing platform will be accessible to SG CIB and CACIB’s customers seeking an OTC IRS clearing solution.

Newedge is an established participant in cleared OTC commodity swaps through CME ClearPort, ICE Clear Europe and SGX AsiaClear. The firm also expects to evaluate and participate as a clearing broker in additional OTC central counterparty clearing venues.

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