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Banks plan to clear 90% of their new swaps with a clearinghouse by December

Posted Sep 9th 2009 2:20PM by Connie Madon (RSS feed)
Filed under: Launches, Industry, Market Matters, Technology, NASDAQ

A new day is dawning for regulation of interest rate swaps. Fifteen banks have agreed to clear 90% of new credit derivatives by December. Banks will also submit 60% of existing interest rate swaps to a central counter party.

What does this mean? It means that trades will clear through an independent counter party called a clearinghouse. What then is a clearinghouse? A clearinghouse is a central counter party that serves as buyer to every seller and seller to every buyer. Commodity futures trades pass through a clearinghouse.

What kind of numbers are we looking at? The interest rate swaps market is a $403 trillion market.

Continue reading Banks plan to clear 90% of their new swaps with a clearinghouse by December