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Liffe and LCH Clearnet launch credit default swaps on Bclear


Liffe, the global derivatives business of NYSE Euronext, and LCH Clearnet, a global central counterparty, have launched credit default swap index contracts on Bclear.

Liffe says it is the first exchange to offer clearing of CDS contracts, while the launch also represents an expansion of Bclear from an equity derivatives service to a wider cross-asset class platform.

The contracts reference ISDA 2003 Credit Derivative definitions, and in the case of credit events settle using the final price of ISDA Credit Event Auctions.

The CDS clearing offered via Bclear will initially cover the Markit iTraxx Europe, Market iTraxx Crossover and Markit iTraxx Hi-Vol indices.

Duncan Niederauer, chief executive of NYSE Euronext, says: 'We are pleased to announce that Liffe is the first exchange to deliver a clearing service for CDS contracts. This important launch delivers one of the highest financial priorities for governments and regulators globally.'

CDS contracts are negotiated and agreed away from the exchange before being processed through Bclear and cleared through LCH.Clearnet.

Garry Jones, executive director at Liffe, says: 'We have worked closely with market participants, ISDA and LCH Clearnet to ensure our contract design meets the market's requirements. We have actively participated and will continue to participate in regulatory and industry discussions on CDS clearing. We look forward to offering more CDS products as we move into 2009.'

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