CCorp says CDS clearing counterparty will launch by year-end

CCorp says CDS clearing counterparty will launch by year-end

Chicago-based CCorp (the Clearing Corporation) has moved to quell rumours that its plans for developing a central counterparty for credit risk has faltered, and has pledged to launch the new facility by the end of the year.

CCorp, which is backed by major credit dealers, IDBs and Eurex and Markit, says it is currently in the process of establishing a wholly-owned, limited purpose, New York trust bank that will serve as a central clearing house with respect to CDS transactions. To this end, it is working with the Federal Reserve Bank of New York and the New York State Banking Department to obtain a state banking license.

CCorp began working with the Depository Trust and Clearing Corporation (DTCC) earlier this year to establish s central counterparty for credit default swap transactions registered within DTCC's Trade Information Warehouse, with a view to a Q3 launch.

CCorp's backers includes bankrupt institutions Bear Stearns and Lehman Borthers, plus other troubled institutions such as Merrill Lynch, Goldman Sachs and Morgan Stanley. The failure to deliver the platform on schedule had fed speculation that the programme had fallen victim to financial market turmoil.

In today's statement, CCorp says: "In light of recent unprecedented events in the CDS market and in anticipation of receiving required regulatory approvals, TCC and its clearing participants are moving aggressively to launch the CDS clearing platform by the end of this year. System testing, which is proceeding according to plan and validating the design and operation of the CDS clearing platform, is nearing completion."

The group says both US and European participants have been involved in the development and testing of the system.

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