The service will be managed by Paris-based LCH.Clearnet SA, which is a Eurozone bank and regulated by the Banque de France.

The announcement comes as the European Central Bank convenes a meeting of industry participants at its offices in Frankfurt in an effort to kickstart a stalled EU-inspired push to develop a eurocentric CDS clearer. The European Commission has been threatening to legislate for the introduction of a central counterparty service after market participants shirked an end-of-year deadline to produce firm proposals.

LCH.Clearnet says it has drawn up its own plans in response to both regulator and market demand.

LCH.Clearnet currently clears circa 50% of the US $140 trillion global interbank interest rate swap market. In December 2008, the depository's London operation was the first clearing house to launch CDS clearing for European indices, in association with Liffe.

Christophe Hémon, chief executive, LCH.Clearnet says; "We are leveraging expertise from across the group to deliver the benefits of clearing to the Eurozone CDS market."

The Anglo-French clearer is currently the subject of intense market scrutiny as its proposed merger with the US-based Depository Trust and Clearing Corporation awaits a possible challenge from a consortium of major banks led by inter-dealer broker Icap.

The FT reports today that Tullett Prebon, GFI Group and Tradition, three of the world's largest IDBs, have approached the consortium about joining the bid.

The inter-dealer brokers are particularly interested in further developing LCH.Clearnet's strong position in the European OTC markets.