ASX clears its first OTC interest rate swap
- Thursday, 12 September 2013
The Australian Securities Exchange (ASX)'s OTC derivatives clearing service saw its first interest rate swap activity on September 12, with the clearing of a transaction between Commonwealth Bank (CommBank) and Deutsche Bank. The exchange expects the introduction of dealer-to-dealer clearing – and its adoption this year by nine foundation customers – will be followed in Q2 2014 by the extension of OTC clearing services to end users.
CommBank and Deutsche Bank are two of the nine foundation customers which committed to help develop the ASX's OTC clearing service, and then to become users by January 1 2014. The other seven are ANZ, Citi, J.P.Morgan, Macquarie Bank, National Australia Bank, UBS Investment Bank and Westpac Institutional Bank.
This market interaction has repeatedly been emphasised by the ASX and its clients in the run-up to the service's debut. Following the first trade, David Farr, chief operating officer, global markets at CommBank in Sydney, complemented the ASX's "engaging and collaborative approach" to the development process. He adds that this "has ensured that key domestic market requirements have been met, alongside delivering international best practice in OTC clearing".
Meanwhile Deutsche Bank's Sydney-based co-head of markets prime finance, Asia Pacific, Peter Connor, confirmed his bank's support for and development work with the domestic OTC clearing service.
And in July, Connor told KangaNews: "As a bank we had a core view that it is important for a market the size of Australia to have its own domestic clearing infrastructure. In Australia the ASX was the incumbent. Once it made the decision to proceed with establishing OTC clearing we have been very involved in working with the exchange to shape the right solution for market participants."
• The October edition of KangaNews magazine will feature insights from the ASX and buy- and sell-side derivatives end users on OTC clearing in Australia.
