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Alliance Bernstein Began Clearing Swaps Ahead of Mandate

The buy-side firm is actively clearing interest rate swaps through LCH.Clearnet's SwapClear service so it can plan ahead for market structure changes and optimize its clearing solutions.

In a sign that large buy side-institutions are preparing for central clearing mandates, Alliance Bernstein is now actively clearing over-the-counter interest rate swaps through LCH.Clearnet’s Swapclear service, according to the global clearing organization. The move comes in advance of regulatory mandates in the U.S. to clear over-the-counter derivatives.

The initial trades were executed and cleared by Citi and affirmed over MarkitServ. These trades complement the $1 trillion notional of interest rate swaps that have now been cleared on behalf of buy-side clients using the SwapClear service, according to LCH.Clearnet.

“Clearing ahead of the regulations makes sense for us. It means we can plan for the changes in market structure and optimize our clearing solutions in line with our portfolio requirements,” commented James Wallin, SVP, fixed income at Alliance Bernstein, in the release.

“Alliance Bernstein is the latest in a rapidly growing and diverse group of clients to adopt central clearing. These firms are reaping the capital and operational efficiencies of being at the vanguard of change,” said Daniel Maguire, head of SwapClear U.S. “We are delighted that they – like the others – selected SwapClear as their clearing service of choice for our broad product range, unrivaled liquidity, and superior risk management capabilities.”

Commenting on the pending regulatory requirement, Christopher Perkins, global head of OTC clearing at Citi, noted: “Mandatory central clearing for some members of the buy-side is rapidly approaching, and we’re seeing many clients, like Alliance Bernstein, making an early transition ahead of regulation because they believe it makes commercial sense,” “Working with central counterparties to provide OTC clearing underscores Citi’s commitment to our clients throughout the globe, and reinforces our shared vision to increase transparency and reduce systemic risk.”

SwapClear was launched in 1999 by LCH.Clearnet, a CFTC-regulated derivatives clearing organization since 2001. The 1 million trades in SwapClear have an aggregate notional principal amount of more than $300 trillion, with a further $126 trillion of cleared transactions removed through multilateral trade compression.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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