Pioneering initiative supports derivatives market as it readies for mandatory clearing
NEW YORK, October 10, 2012 – LCH.Clearnet Limited’s interest rate swap (IRS) clearing service, SwapClear, today launched the industry’s first certification program for consultancy firms preparing market participants for the implementation of centralized OTC clearing. Five leading consultancies have already signed up to join the global initiative, which provides experience-based certification and CCP-authorized resources to better inform industry practitioners at this critical time.
The SwapClear Consultancy Certification Program (CCP²) launches as buy-side participants begin to clear in earnest ahead of the regulatory mandate. To date, four consultancies have become certified under the program: Accenture, Catalyst Development Ltd, Rule Financial and Sapient Global Markets. In addition, Deloitte has joined the program as a Knowledge Partner.*
End-user client firms have cleared more than USD 5 trillion notional of interest rate derivatives using SwapClear’s proven and robust risk management framework. With cleared IRS volumes and SwapClear membership expected to increase significantly in the coming months, harnessing relevant experience will be a key ingredient in the successful implementation of global clearing mandates for many firms.
The CCP² program gets its name from the combined value that a central counterparty (CCP) offering a consultancy certification program (CCP) can provide the marketplace.
The certification process requires applicants to undergo an assessment of the depth and scope of their experience in OTC clearing. It also necessitates familiarity with some of its core components. Consultancies can register for certification in any of up to 10 categories, although approval is not guaranteed by SwapClear. Uncertified participation is also available for Knowledge Partners.
“Clearing firms and buy-side clients are facing significant challenges as they look to implement central clearing for OTC derivatives,” said Jeff Bandman, head of Partnerships and Alliances at SwapClear. “This innovative program is designed to create a more efficient framework that will assist market participants as they adjust to the new regulatory environment. In addition, it represents a further example of SwapClear’s commitment to collaboration for the benefit of all market participants.”
“CCP² provides a valuable tool to help market participants address the new wave of regulatory requirements,” said Dean Jayson, managing director of Accenture’s Capital Markets practice in Europe, Africa, Latin America, and head of Accenture Trading Services in the UK and Ireland. “By offering rigorous accreditation criteria, SwapClear is helping its customers with the smooth and efficient adoption of OTC clearing. Accenture has deep experience in this area, and we are pleased to offer our services to SwapClear member firms and their clients through this program.”
“There are a lot of moving parts in the clearing model, and experience working with the right systems and processes is a critical component for implementation success,” said Jim Bennett, managing director, Sapient Global Markets. “The CCP² program provides a way for the industry to ensure it is getting advice from knowledgeable and seasoned practitioners such as Sapient Global Markets, and we look forward to continuing our relationship with SwapClear as it rolls out this program.”
“We are extremely proud to be a founding participant in the SwapClear certification programme. The CCP² initiative is a significant step forward for the industry, which will enable clearing members and their clients to select consultancies with confidence,” said Christian Lee, head of Catalyst’s Risk & Clearing practice. “Not only does certification evidence our experience and expertise, but it also signals our commitment to help the marketplace address the sweeping challenges of OTC derivatives reform.”
“Global regulations are forcing massive change on the industry, and we view the launch of SwapClear’s CCP² programme as a positive step in bringing standards to market participants tackling these new requirements,” said Chris Potts, CEO at Rule Financial. “Our 2012 OTC survey found that 70 percent of sell-side and 40% of buy-side participants are very concerned about lack of clarity, content and the implementation of central clearing regulations, showing the value of those who can remove ambiguity.”
*A CCP2 Knowledge Partner is a consultancy that has access to the knowledge and training resources of CCP2 and is active in the OTC clearing space but has not applied for or received certification.