IntercontinentalExchange, Markit, others to establish counterparty clearing for credit default swaps

By Jennifer Chiou

New York, Oct. 10 - A group of credit derivative market participants, including the Clearing Corp., Markit Group, Risk Metrics and IntercontinentalExchange, Inc. through its subsidiaries ICE US Trust, Creditex and T-Zero, announced that they have joined forces to support a joint global clearing solution for credit default swaps.

The signed letter of intent signals the intention of the signatories to use their best efforts to work together in establishing a clearinghouse that will accomplish the objectives established by the Federal Reserve Bank of New York.

The Federal Reserve Bank of New York was to host a second meeting to discuss industry progress toward the creation of a central counterparty for credit default swaps on Friday. The meeting was to include representation from four potential CDS central counterparties: Eurex, NYSE Euronext, CME Group/Citadel and IntercontinentalExchange/Clearing.

The Federal Reserve added that it does not endorse any of these specific proposals but is seeking to accelerate market adoption of central counterparty services.

ICE US Trust will operate as a New York limited trust company and function as a global clearinghouse and central counterparty for CDS transactions, according to a news release.

ICE US Trust plans to become a member of the Federal Reserve System.

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