Expanding the range of derivatives eligible for clearing will allow market participants trading UK, European, and US inflation-linked products to benefit from the efficiencies and enhanced risk management associated with central clearing.

Trading in inflation-linked swaps is popular among asset managers and pension funds looking to guard against rises in inflation and interest rates. Firms opting to clear inflation swaps through SwapClear are able to offset their margin requirements with correlating interest rate derivatives cleared at LCH.Clearnet.

Nathan Ondyak, Head of Products and Markets, SwapClear, LCH.Clearnet, said: “After thorough risk reviews and testing, we are proud to be the first CCP to secure regulatory approval under both the EMIR and US Commodity Exchange Act regulatory frameworks for inflation swaps clearing. Clearing this new product, which shares structural similarities with other cleared interest rate derivatives, is a significant move for the market and underlines our commitment to providing safe and innovative risk management services to our members and their clients.”

Simon Wilkinson, Head of LDI Funds, Legal & General Investment Management, said: “Risk management is a top priority for fund managers. Central clearing significantly mitigates counterparty risk and we welcome industry moves to provide clearing services for inflation swaps.”