NY approval brings Ice CDS clearing platform a step closer

The Intercontinental Exchange (Ice) has won permission to create a New York-chartered trust company, the next step towards the creation of its central counterparty (CCP) facility for credit default swaps (CDS).

Under the approval granted yesterday by the State Banking Board, the Atlanta-based exchange and its affiliate, the Chicago-based Clearing Corporation, will be permitted to create Ice US Trust, the entity that will operate the joint central clearing house platform.

This will allow Ice US Trust to raise capital - which will be provided by Ice. Upon the fulfillment of other conditions set by the Board, the state superintendent will issue an authorisation certificate allowing the platform to commence business.

"While reducing risk with respect to complex derivatives products is an evolutionary process and will take some time to complete, I am proud of New York's early involvement in shaping its future," said Richard Neiman, superintendent of banks and chairman of the Board. "We have worked closely with our counterparts at the Federal Reserve Bank of New York in overseeing this industry initiative, to strengthen arrangements for clearing and settling CDSs and thereby reduce systemic risk."

Approval of related applications pertaining to Ice's clearing house is pending from the New York Fed. Other CDS clearing platform proposals from Chicago Mercantile Exchange Group and hedge fund Citadel, NYSE Euronext and Frankfurt-based exchange Eurex are in various advanced stages of development and in some cases awaiting regulatory approval to begin operation.

See also: November target for CDS central counterparty
Banks move to central clearing across asset classes
Ice picks off ClearCorp