CME Group is to begin clearing Interest Rate Swaptions on 11 April.
"CME Clearing is proud to be the first clearing house to deliver interest rate swaption clearing, a capital efficient clearing solution that has the opportunity to transform the interest rate swaps landscape for our customers," says Sunil Cutinho, President, CME Clearing. "Swaption clearing enables clients and dealers to substantially reduce their risk and gain margin efficiencies of up to 90 per cent by adding swaptions to their CME cleared interest rate swaps portfolios."
Five clearing members are approved to clear swaptions upon launch, with additional firms working through the approval process to begin clearing swaptions.
"With uncleared margin rules coming into greater focus for our clients, Credit Suisse is excited to facilitate voluntary swaptions clearing at CME Group," says John Dabbs, Global Head of Prime Derivatives Services at Credit Suisse. "Clearing swaptions enables our clients to obtain the greatest operational and capital efficiencies from clearing, while reducing the risks in their portfolios."
"RBS plc is pleased to take a leadership role as one of the first banks that will provide cleared swaption liquidity to our global client base," says Alan Mittleman, Head of Rates Trading, Americas at RBS plc. "We are very supportive of the early adopters that use the CME swaption clearing solution to reduce bilateral counterparty exposure, particularly with the added cost of margin for non-cleared derivatives coming later this year."
The initial product scope will include US Dollar denominated swaptions with European style exercise, a maximum two-year option expiry, and a maximum underlying swap tenor of 30 years.