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BME Clearing applies for authorisation to launch a new segment for interest rate swaps

• The Spanish CCP segments would increase to 4: financial and energy derivatives, repos and now, OTC IRS

23 February, 2015

• The Interest Rate Swaps market is the largest globally, with annual gross notional outstanding exceeding 550 trillion Euros  

BME CLEARING, the Central Counterparty (CCP) of BME, has applied for authorisation to expand its activities to start clearing OTC Interest Rate Swaps (IRS), by opening a new segment within the CCP, called BME CLEARING OTC IRS, created specifically for clearing this type of product.

This new segment has been created in response to the new clearing regulation (the legislative process is pending completion), which will make it compulsory for all financial firms, insurance companies and other non-financial institutions to clear in a CCP all the Interest Rate Swaps that have certain features. BME CLEARING will cover all the Euro contracts affected by the new regulation.

The global market for Interest Rate Swaps is the largest at world level, with gross notional outstanding exceeding 550 trillion Euros.

BME CLEARING’s new service is scheduled to start in the third quarter of this year, once the mandatory administrative authorisation is obtained and coinciding with the expected entry into force of the clearing obligation.

With the creation of this segment, customers will also benefit from capital efficiencies by registering with a CCP rather than maintaining their counterparty risk with increased capital consumption.

Ignacio Solloa, CEO of BME CLEARING, stated that "with the new products admitted for clearing in BME CLEARING, we will offer an efficient and affordable service to firms subject to the requirements of the new regulation."

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