LCH CDSClear now clears single name CDS referencing their clearing broker in so-called ‘clients self-referencing transactions’. The new service allows clients to clear all components of index basis packages on iTraxx Main and Senior Financials.
“To clear our index arbitrage trades, we need the IM (initial margin) of the package to reflect the full offset of the risk,” said Philippe Donnat, CEO of Hellebore Capital in a statement.
“That’s why every single name referenced in the index has to be eligible for clearing. Only LCH CDSClear offers us this opportunity in Europe,” he added.
Benefits include: IM reduction of up to 85% from portfolio margining on Index Arbitrage Portfolios; clearing of all Single Name constituents of Main, Crossover and Senior Financial Indices; and robust risk management capturing the net self-referencing risk.