IntercontinentalExchange (ICE) says it will introduce a solution that will enable buy-side participation in credit default swap clearing by October.
The move follows growing regulatory pressure for broker-backed clearing counterparties to make provisions for direct buy-side involvement in central clearing of OTC transactions.
In June, BlueMountain Capital COO Samuel Cole accused major derivatives dealers of "filibustering" to protect their ogilopoly by withholding support from buy-side-friendly rivals to the ICE Trust credit default swaps clearing house.
Earlier this month, the New York Federal Reserve said it expected market participants to strengthen the foundations for buy-side clearing and start clearing customer trades by 15 December, 2009.
ICE says that its solution will provide segregation of customer funds and positions, as well as enhanced position and margin portability. The expanded legal framework is expected to protect customer positions and collateral in the event that a clearing member defaults on its obligations to the clearing house, offering increased security for buy-side market participants.
Jeffrey Sprecher, chairman and CEO of ICE, says: "Our segregated funds solution has been designed to provide robust protections for buy-side firms and to ensure our CDS clearing offering serves the needs of the entire CDS market."
He says the company is also working with relevant supervisory authorities in Europe to introduce similar provisions as it gears up to begin clearing European CDS transactions by the end of this month.