Banks explore spin-offs for cleared swaps desks

Banks are quietly exploring the sale of cleared swap desks to private equity firms in order to cut the amount of capital the business consumes and help it compete with aggressive new entrants like Citadel Securities. The question is whether regulators will allow it

Banks are "trying to make a strategic divestment of the cleared swaps trading business and move it outside the Basel III world"

Large derivatives dealers in the US and Europe are exploring the spin-off of their cleared swaps desks, in a move that could slash the capital they consume – by more than a half, according to one estimate – and help them go toe-to-toe with aggressive new entrants such as Citadel Securities.

Lawyers are now quietly helping the banks sketch out the terms of a divestment, answering questions about how big a stake the current owners could retain – US law sets the maximum at 24.9% – and how the