(Bloomberg) — Intercontinental Exchange Inc. is considering moving its European clearing house for credit default swaps (CDS) to the United States.
The company is in talks with its customers to move its facilities from London to Chicago, where most of the compensation is already being done, according to people with knowledge of the conversations. Plans have not been finalized and could change based on comments and other logistical aspects, said one person, who asked not to be identified because it was a private matter.
The move would follow a trend in the CDS market, where most of the compensation is already done in the US. ICE compensates about 95% of the corporate and sovereign CD market, mainly in Chicago, and about 10% in London, according to its website.
An ICE representative declined to comment. The proposed plans were previously reported by Reuters.
ICE, also parent of the New York Stock Exchange, is a major clearing house for CDS contracts worldwide. It is an intermediary between buyers and sellers, responsible for the settlement of trading accounts, clearing operations and functions such as the delivery and reporting of business data.
The company began offsetting credit default swap contracts in the US and London in 2009, during the financial crisis. Its Clear Credit unit in Chicago is responsible for the US, while ICE Clear Europe is its office in London. The London Stock Exchange has its own clearing house, known as LCH.
The Clear Credit unit is recognized by European regulators, allowing it to handle CDS transactions for European Union customers from Chicago.
Original Note:
ICE Weighs Moving Its London CDS Clearinghouse to Chicago
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