CCPs confront cleared swap basis threat

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

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

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