Buy-Side Swap Clearing Soars As Dodd-Frank Looms

The number of interest rate swaps being cleared by buy-side trading firms ahead of the implementation of Dodd-Frank regulations has surged over the last year, a trend that SwapClear says is giving no indication of slowing down.

SwapClear, a clearing service that's owned by LCH.Clearnet, said buy-side cleared volumes rose 175 percent between April 2011 and April 2012, a rise it attributes to the coming regulatory mandates in the U.S. and Europe.

"These numbers confirm the trend towards voluntary client clearing in both the U.S. and Europe," said Ray Kahn, the head of over-the-counter derivatives clearing at Barclays. "This early clearing activity is important to ensure operational and infrastructural readiness ahead of the regulatory mandates.

Meanwhile SwapClear noted that it's a beneficiary of the soaring demand.

"The pipeline of buy-side clients looking to use SwapClear has grown considerably in the last two months, a trend which shows no signs of slowing," said Daniel Maguire, the head of SwapClear's U.S. operation. "While regulation is a catalyst, it's the inherent benefits of central clearing which are driving this market evolution."

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio