Nasdaq OMX has initiated a pilot project with SEB and the Swedish National Debt office to offer central counterparty clearing of interest rate swaps as a prelude to the creation of a full scale clearinghouse for IRS in Swedish kronor.
The first transactions under the new model have already been cleared through the Nasdaq OMX CPP. Previously, Skr-denominated IRS, a market with an average daily turnover of Skr30 billion, have been collateralised and settled bilaterally.
The transatlantic exchange says it has already initiated a strategic dialogue with all major swap dealers in Sweden, with the aim of rolling out a national central clearing utility.
"Through the IRS central counterparty clearing offering, Nasdaq OMX is building a Nordic clearing house that covers all Fixed Income instruments," says Erik Thedéen, head of Nordic fixed income and president Nasdaq OMX Stockholm. "This service will reduce the administrative burden and, more importantly, bring with it a reduction of counterparty risk for market participants and thereby improve financial stability. The ability to net multiple post-trade transactions through a central counterparty also allows our market participants to reduce collateral significantly."