Chicago-based CME Group (NASDAQ: CME), one of the world’s paramount exchange operators, has expanded its global interest rate clearing solutions to now include 21 currencies of swaps with the addition of the Korean won (KRW) IRS and the Indian rupee (INR) OIS. The exchange today announced that it has already cleared trades on the new swap currencies. Its settlements are treated as non-deliverable, so it uses local FX fixings to convert KRW and INR to the American dollar.
CME Swaps on KRW and INR offers the OTC marketplace the full benefits of central counterparty clearing. The product combines anonymous access to high-volume customer groups with the regulatory protection and risk management previously only available with exchange-traded products.
The new offering includes forward-dated interest rate swaps (IRS) on the Korean won with maturities up to 21 years, as well as short-term overnight index (OIS) swaps on the Indian rupee up to 10 years.
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Sean Tully, Senior Managing Director of Financial and OTC Products at CME Group, commented: “Clearing Korean won and Indian rupee swaps in the first week they’re available for customers is a testament to the strong demand from global clients and liquidity providers, particularly in Asia, to voluntarily clear these products. Our focus is to provide better long-term liquidity, as well as counterparty, capital and operational efficiencies to market participants who are looking for solutions in the cleared space.”
Credit Suisse was chosen to clear the first Indian rupee OIS and Korean won swaps at CME. John Dlubac, Director of the bank’s prime services, noted: “As our clients prepare for the implementation of uncleared margin rules, voluntary clearing is paramount to manage counterparty risk, gain capital efficiencies, and streamline operational processes.”
Thomas Treadwell, APAC Head of OTC Clearing at Citi, added: “Citi is thrilled to extend KRW and INR interest rate swap clearing to our global client base, and we expect voluntary clearing to significantly increase as uncleared margin rules are implemented throughout the world. These products will nicely complement Citi’s comprehensive and industry-leading Futures and OTC clearing platform.”