The eight founding members of the OTCDerivNet platform have started clearing swaps through LCH SwapClear - the central counterparty clearing service provided by the London Clearing House.
OTCDerivNet was launched in October 2000 by Bank of America, Barclays, Citibank/Schroder Salomon Smith Barney, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch and Société Générale with the goal of working with LCH to improve the post-trade dated processing environment.
The initial tranche of swaps entered by OTCDerivNet members into the SwapClear system totals approximately 4250 trades with a notional principal in excess of $250 billion. These trades are securely margined and settled through LCH, as the central counterparty, on a daily basis.
This is the first instalment of an on-going programme, involving the novation of existing bilaterally negotiated trades into the LCH SwapClear service, which will continue throughout the year. The eight banks have also started implementing the Swift Accord interface, which will enable straight-through-processing on all newly transacted trades.
A spokesperson for OTCDerivNet says the group will now be looking to increase the range of products that can be cleared through the LCH SwapClear service.