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Compression drives down CCP swap notionals 

December 1, 2014
Helen Bartholomew, IFR

Mounting pressure on derivatives counterparties to eliminate superfluous trades has driven the first annual decline in notional outstanding at the largest swaps clearing house. And with buy-side and sell-side firms ramping up efforts to slash swaps notionals as crippling leverage ratio requirements under Basel III begin to bite, a new range of new compression services are being prepared.

Total notional outstanding in LCH.Clearnet’s SwapClear service stood at US$407trn at the end of October compared with US$426trn at the start of the year, despite the firm hitting new records in cleared trade flows.

The CCP added US$563trn in new trades, offset by US$334trn of maturing contracts and a further US$250trn eliminated through unilateral and multilateral compression services.

Read more: IFR

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