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Mandatory clearing in Europe will be phased in over three years, starting with the biggest traders in February. The rules will apply to five-year, euro-denominated contracts on Series 17 and above of the Markit iTraxx Europe index and Markit iTraxx Crossover Index. The investment-grade and high-yield measures of credit-default swaps, which are updated every six months, are currently on Series 25.
“Today starts the countdown,” said Frank Soussan, global head of CDSClear at LCH, the clearinghouse majority owned by London Stock Exchange Group Plc. “The rules coming into force means that banks and asset managers will start getting prepared to clear before the deadlines kick in.”
A growing portion of the market is already trading through central counterparties as nations including the U.S., Brazil and Japan enforce measures for some indexes, while investors voluntarily clear some trades on individual companies.