IntercontinentalExchange, Clearing will combine to form CDS clearing solution

By Angela McDaniels

Tacoma, Wash., Oct. 30 - IntercontinentalExchange, Inc. agreed to acquire Clearing Corp. to form ICE US Trust with the support of Bank of America, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Merrill Lynch, Morgan Stanley and UBS.

As previously reported, IntercontinentalExchange and Clearing are working with regulators, other market participants and industry groups to develop a comprehensive central counterparty clearing solution for the credit default swaps market.

This solution is undergoing final testing in preparation for launch, and the companies expect to begin clearing CDS transactions through ICE US Trust in the fourth quarter, according to a joint IntercontinentalExchange/Clearing news release.

The boards of directors of IntercontinentalExchange and Clearing have approved memorandums of understanding to develop the joint clearing solution and to effect the acquisition, which are subject to the receipt of government approvals.

ICE US Trust will operate as a New York limited-purpose trust company and function as a global clearinghouse and central counterparty for CDS transactions, and it plans to become a member of the Federal Reserve System, according to a prior news release.

Following the transaction, Clearing will continue to support its existing clearing customers.

Atlanta-based IntercontinentalExchange operates regulated futures exchanges and over-the-counter markets for agricultural, energy, equity index and currency contracts as well as credit derivatives.

Clearing is a Chicago-based independent derivatives clearinghouse.

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