Liffe CDS contracts will be based on the Markit iTraxx European indices.
The move marks a significant expansion of Liffe’s award winning Bclear service from equity derivatives into a new asset class.
Liffe CDS contracts on Bclear will combine the security of central counterparty clearing with the flexibility that OTC market participants demand. Pre-negotiated trades that are agreed off exchange will be booked into a proven OTC clearing solution, addressing the operational and systemic risk concerns that are at the forefront of discussions between regulators and industry bodies.
Garry Jones, Executive Director of Business Development and Strategy at Liffe, commented: "We are pleased to announce the launch of CDS contracts on Bclear. Liffe is the first exchange to work with the market by launching CDS contracts rather than credit futures or options, and by allowing business to be pre-negotiated and booked into a secure exchange and clearing house environment. The proven success of Bclear for other derivatives puts Liffe in a unique position to offer this exciting service for CDS."
Bclear is the on-exchange administration and clearing service that provides a simple and cost-effective way to register and process wholesale derivatives trades through Liffe to clearing at LCH.Clearnet Ltd. This can reduce the counter-party credit, legal and operational risks associated with OTC deals.
For more information, please contact:
1. Liffe is the international derivatives business of Euronext, a subsidiary of NYSE Euronext. Liffe offers an unrivalled range of global futures and options products, which are made available to customers worldwide on its state-of-the-art trading platform, LIFFE CONNECT®. Business in derivatives on equities and interest rates, indices and commodities worth over €2,300 billion in total is traded through Liffe every day, making it the world’s second largest derivatives exchange, by value of transacted business.
2. Bclear is operated by LIFFE Administration and Management, which is regulated by the Financial Services Authority (FSA) as a Recognised Investment Exchange.
3. Detailed contract specifications will be finalised and published in due course, following the Exchange’s usual internal due diligence processes.
4. Besides the wide range of products on offer, and the simplicity of the service, Bclear offers customers a number of other advantages. Trade details need not be published, and there is no requirement for customers to reveal their name to their counterparty as there is with traditional OTC trades, nor any obligation to trade out with the same counterparty. All open positions are marked to market daily.
Contact: Blandine Guegan