Newedge, a global leader in multi-asset brokerage and clearing, today announced plans to develop its clearing facilities for interest rate swaps (IRS), thus extending its leading position in central clearing.
Newedge's entrance into this space significantly expands its existing activities and complements its leadership in global exchange-traded and cleared derivatives (ETDs).
Newedge's IRS Clearing initiative is supported by a partnership with SG CIB and CACIB. SG CIB and CACIB will serve as Newedge's cleared IRS contingent default managers. In addition, Newedge's OTC IRS clearing platform will be accessible to SG CIB and CACIB's customers seeking an OTC IRS clearing solution.
Newedge will be the first independent Futures Commission Merchant (FCM) to deliver the benefits of CCP clearing of OTC IRS to incumbents, new IRS liquidity providers and buy side clients. Specific benefits include reduced counterparty risk, default protection and capital efficiencies from cross-margining opportunities. The move follows regulatory changes to the $441* trillion IRS market where Dodd-Frank in the US and European Markets Infrastructure Regulations are paving the way for a shift in the bilateral OTC market towards increased central counterparty clearing (CCP), greater transparency and reduced counterparty risk for the benefit of end customers.
"Newedge is committed to extending our established listed derivatives clearing services to additional OTC asset classes, beginning with IRS", said Newedge CEO Nicolas Breteau. "To fulfill this strategic objective, we are enhancing our multi-asset infrastructure, leveraging the support of our A+ rated shareholders and, working closely with regulators and CCPs. We continue to make a material contribution to shaping what is a dynamic market structure," states Breteau.
"Our derivatives clients are a key focus for the bank and we are very pleased to support them with this major development, together with Newedge. This will allow them to fully comply with the new regulatory environment and to benefit from Newedge's expertise in clearing," said Dan Fields, Head of Global Markets at SG CIB.
"We are delighted to partner with Newedge in this important initiative which is helping our clients to benefit from, and adapt to, the regulatory market structure changes," said Thomas Gadenne, Global Head of Fixed Income at CACIB.
In establishing this partnership, SG CIB and CACIB are confirming their commitment to provide the full set of services to their clients transacting in OTC markets. This partnership is due to go live in Q2 2012.
* Source Bank of International Settlements June 2011 statistics