OTCDerivNet Founder Banks Go "Live" With LCH SwapClear

LONDON, 14 March 2001 -- The eight leading derivative houses who launched OTCDerivNet Ltd. in October last year (Bank of America, Barclays, Citibank/Schroder Salomon Smith Barney, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch and Société Générale), announced today that they have started clearing swaps through LCH SwapClear. LCH SwapClear is the OTC interest rate swap clearing service provided by the London Clearing House.

The initial tranche of swaps entered by OTCDerivNet members into LCH's SwapClear system totals approximately 4,250 trades with a notional principal in excess of $250 billion. These trades are now securely margined and settled through LCH, as the central counterparty, on a daily basis. This is the first instalment of an on-going programme, involving the novation of existing bilaterally negotiated trades into the LCH SwapClear service, which will continue throughout the year. The eight banks have also started implementing SWIFT Accord, which will enable them to gain the benefits of straight-through-processing on all newly transacted trades.

A spokesperson for OTCDerivNet commented: "This achievement is a major step for OTCDerivNet, serving to consolidate the group's commitment and determination to deliver improvements to the post-trade-dated processing environment. The group is now looking forward to increasing the range of products that can be cleared through the LCH SwapClear service and to providing further strategic direction and funding to this important initiative".

David Hardy, LCH's Chief Executive added: "This successful 'big-bang' approach in launching eight major derivative houses into LCH SwapClear at one time, is testament to the months of hard work across all the organisations. We are confident that this process has marked the first stage of the market's acceptance of LCH SwapClear as the way ahead for the swaps business. We look forward to cementing our relationship with these banks and working closely with them as the market takes the derivatives business to new levels of efficiency using LCH as its central counterparty".