Intercontinental Exchange’s ICE Clear Credit has surpassed USD100 billion year to date in gross notional cleared for client accounts for single name credit default swaps (CDS).
ICE Clear Credit is a global clearing house for credit derivatives clearing.
ICE Clear Credit launched client clearing for single name CDS in June 2013. Since launch, the number of clients actively clearing these instruments has grown consistently and is now over 100, with 90 per cent of client volume occurring since the start of 2015.
Year to date, over USD100 billion notional in single name CDS has been cleared at ICE Clear Credit, compared with USD33.3 billion for the full year of 2015, an increase of 200 per cent.
The growth in client clearing at ICE Clear Credit has occurred in the absence of a regulatory single name CDS clearing mandate for clients and illustrates the benefits of central clearing, including operational and capital efficiencies, as well as counterparty protections.
"This is an important milestone for both ICE Clear Credit and the market as a whole," says Peter Borstelmann, head of corporate development, ICE Clear Credit. “We have achieved this growth by working with customers to ensure we have the right products and clearing processes in place to create liquidity, transparency and restore trust in the single name CDS market.”
Amy Hong, head of market structure for global credit products at Goldman Sachs, adds: “Approximately 40 per cent of our client-facing single name CDS volumes in eligible North American reference entities have cleared year-to-date. We view this progress to be material and helpful in restoring market confidence in single name CDS.”
Ritesh Shah, chief operating officer for global credit at Citadel, says: “Citadel strongly supports the shift to central clearing of single name CDS, which will strengthen the market by increasing participation, fostering liquidity, and addressing counterparty credit risk concerns.”
Launched in 2009, ICE Clear Credit and ICE Clear Europe clear more than 500 single name and index CDS instruments based on corporate and sovereign debt. ICE’s CDS clearing houses have reduced counterparty risk exposure by clearing USD80 trillion in gross notional amount of CDS instruments, with resulting open interest of approximately USD1.4 trillion.
