CCPs confront cleared swap basis threat

From Japan to Mexico, CCPs are trying to avoid repeat of CME-LCH price disparity

risk-0815-lead-story-2-mind-the-gap-app-shutterstock-205287112-app
Some clearing houses worry a basis could appear for products they clear, potentially driving business away

Who's next? It's the obvious question when a company falls victim to pressures that apply across its sector.

So, when it became more expensive to trade a pay-fixed US dollar interest rate swap that would clear at CME Group – and relatively cheaper to execute the same trade if it was going to LCH.Clearnet's SwapClear – it was not just the two clearing houses and their customers that started fretting.

In theory, a price difference could emerge for any product cleared at two or more central counter

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: