HSBC and JPMorgan join SwapClear; DTCC hits back at LCH.Clearnet critics

HSBC and JPMorgan join SwapClear; DTCC hits back at LCH.Clearnet critics

HSBC and JPMorgan have become shareholders of OTCDerivNet, the company which provides strategic direction to LCH.Clearnet's SwapClear service.

SwapClear currently clears around 50% of the $140 trillion global interbank OTC interest rate market and its members include many of the world's leading banks.

Chris Willcox, global head of rates trading at JPMorgan says: "At JPMorgan we view the LCH.Clearnet's SwapClear derivatives clearing service as a vital component of the OTC Rates industry. We see the service as a key enabler in supporting greater capacity and improved efficiencies in the rates market."

SwapClear is seen a key asset in the OTC markets, and one of the drivers behind Icap's current consortium-led bid to muscle in on the proposed takeover of LCH.Clearnet by US depository DTCC. Icap is understood to be working with eight major dealers in a bid to derail the agreed merger of the US and London-based depositories.

In defending its position, the DTCC has hit back at media reports detailing the 'Euro-centric' objections to its proposed takeover. In a statement, the DTCC says that its proposals call for the creation of a European holding company (LCH.Clearnet HoldCo) that would have a governing board made up of European firms and be led by a senior management team of Europeans. The European operating subsidiaries would in turn be subject to local regulatory supervision and would have operating centres in the UK and Eurozone, says the DTCC.

"There has been industry comment that DTCC's bid undervalues LCH.Clearnet but this logic is more suited to a contest by a for-profit company seeking to gain competitive advantage at the expense of others, and which will charge increased fees to satisfy the needs of shareholders," the statement continues. "Our proposed merger with LCH.Clearnet is solely focused on leveraging critical mass and economies of scale to reduce costs for all users."

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