Financial institutions using SunGard's GMI clearing and accounting system for exchange traded derivatives, futures and options are now able to process over-the-counter (OTC) U.S. dollar denominated interest rate swap futures business through the International Derivatives Clearinghouse (IDCH), a CFTC-regulated clearinghouse.
As counterparty credit risk has become a key focus in the current financial crisis, the ability for financial institutions to process and clear OTC derivatives through central clearing entities, such as IDCH, will be crucial to helping these institutions increase transparency and manage their exposures. IDCH provides a platform for firms to execute trades in interest rate swap futures as well as to convert OTC transactions to cleared interest rate swap futures. SunGard's GMI provides customers with processing and clearing capabilities for OTC interest rate swap futures through IDCH's centrally cleared platform.
Christopher Edmonds, chief executive officer of International Derivatives Clearing Group, said, "The OTC interest rate swaps market is the largest derivative asset class in the world. The use of a centrally cleared platform for OTC interest rate swap futures contracts helps address problems of opacity and counterparty credit risk. SunGard's GMI provides firms the ability to process and clear transactions with IDCH in an efficient and cost-effective manner."
Gerry Murphy, president of SunGard's brokerage and clearance business, said, "SunGard's GMI helps firms simplify the process for booking interest rate swap futures business, providing back-office processing, and helping them manage relationships. GMI is providing processing with a clearinghouse that can potentially help reduce counterparty risk and provide the added transparency and stability that is needed in the OTC swaps industry."