Dealers have met the July 31 deadline for clearing credit default swaps (CDS) on European reference entities and indexes that they set back in February.
Since Monday, London-based Ice Clear Europe, a central counterparty operated by Atlanta-based IntercontinentalExchange (Ice), has been clearing 'backloaded' trades made earlier this month, an official at the firm said. Meanwhile, Eurex Credit Clear, Eurex's over-the-counter clearing venture, processed its first CDS trade on July 30.
Charlie McCreevy, internal market and services commissioner at the European Commission, applauded the "extraordinary efforts" by the industry in meeting the deadline. He was also pleased that two central counterparties (CCPs) were operational. "The existence and use of more than one CCP is essential for the proper development of a safe and competitive environment," he said.
McCreevy also said a third CCP was expected to begin clearing by the end of the year: LCH.Clearnet SA, the Paris-based business of LCH.Clearnet, which announced its plans in February. Initially the firm had considered working with NYSE Liffe, but will now collaborate with the Depository Trust & Clearing Corporation.
However, he did not mention the joint venture between UK-based LCH.Clearnet and NYSE Liffe, which was launched in December but has failed to attract any business.
The CME Group, which is awaiting regulatory approval from the UK Financial Services Authority to launch a London-based clearing house for OTC derivatives, also wasn't mentioned.
The EC called for central clearing of CDSs in Europe back in October.
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