Brokerage and clearing company Newedge has developed its clearing facilities for interest rate swaps (IRS), in partnership with Societe Generale Corporate & Investment Bank and Crédit Agricole Corporate and Investment Bank.
Brokerage and clearing company Newedge has developed its clearing facilities for interest rate swaps (IRS), in partnership with Societe Generale Corporate & Investment Bank and Crédit Agricole Corporate and Investment Bank.
The French banks will serve as Newedge’s cleared IRS contingent default managers. In addition, Newedge’s over-the-counter (OTC) IRS clearing platform will be accessible to the French banks’ customers seeking an OTC IRS clearing solution.
According to Newedge, this will make it the first independent Futures Commission Merchant (FCM) to deliver Central Counterparty (CCP) clearing of over-the-counter interest rate swaps to incumbents, new IRS liquidity providers and buy side clients.
It said benefits include reduced counterparty risk, default protection and capital efficiencies from cross-margining opportunities.
The move follows regulatory changes to the $441trn IRS market. Dodd-Frank in the US and European Markets Infrastructure Regulations are paving the way for a shift in the bilateral OTC market towards increased CCP clearing, greater transparency and reduced counterparty risk for the benefit of end customers, Newedge said.
Nicolas Breteau, chief executive of Newedge (pictured), said the group was working closely with regulators and CCPs to shape what is a dynamic market structure.
This partnership is due to go live in the second quarter of 2012.
Newedge is a 50/50 joint venture between Société Générale and Crédit Agricole CIB offering clearing and execution services covering options and futures contracts for financial products and commodities, as well as for money market instruments, bonds, FX, equities, and commodities on OTC markets.
