BNY Mellon Clearing, LLC announced today that it has joined CME Group as a clearing member firm in order to clear over-the-counter interest rate swaps on behalf of its institutional clients.
As a result of recent regulatory changes, it is expected that a large percentage of derivatives transactions will be cleared through central clearinghouses. The Dodd-Frank Act passed in the United States last year mandated clearing of "standardized" OTC derivatives.
"The standardization of OTC derivatives and migration to central clearing should reduce counterparty credit risk and allow better regulatory oversight," said Sanjay Kannambadi, CEO of BNY Mellon Clearing. "By joining CME Group as a clearing member for OTC interest rate derivatives, we have partnered with one of the leading and most respected derivatives clearinghouses and expanded the options available to our clients."
BNY Mellon Clearing supports the trading activity of clients by providing direct clearing services with major exchanges and central clearinghouses, including the New York Mercantile Exchange and Chicago Board of Trade, which are operated by CME Group, and International Derivatives Clearing Group. The company expects to continue to expand the roster of exchanges it clears through, as well as expand its operations globally.
"While it appears that a large percentage of OTC derivatives transactions will become centrally cleared, we believe the near term interest among the industry will be focused on interest rate swaps. Our clearing membership with CME Group represents a significant step forward in providing reliable and efficient clearing pathways for our global client base," said Kannambadi.