IntercontinentalExchange Receives Regulatory Approval for Customer Portfolio
Margining; Expands Capital Efficiencies for Buy-Side Clearing
CHICAGO, Jan. 15, 2013
CHICAGO, Jan. 15, 2013 /PRNewswire/ --IntercontinentalExchange (NYSE: ICE), a
leading operator of global markets and clearing houses, announced today that
ICE Clear Credit, the largest North American credit default swap (CDS)
clearing house, has received regulatory approval to provide portfolio
margining relief for buy-side clearing of CDS.
"We appreciate the hard work and cooperation of the CFTC and the SEC to
finalize this order," said ICE Clear Credit President Christopher Edmonds.
"Putting portfolio margining in place for client accounts is an important step
toward realizing one of the key aims of Dodd-Frank, to encourage increased
clearing of swaps."
Portfolio margining allows clients to achieve capital efficiencies by clearing
index and single name CDS in a single segregated CFTC customer account.
Previously, a client would have been required to post full margin on a
single-name position held in an SEC account as well as full margin on an index
position held in a CFTC account even if the two positions offset each other
from a risk perspective. By combining the positions in one CFTC account and
applying a portfolio margining methodology to reduce the amount of margin
needed, the clearing house provides capital efficiencies while maintaining
strong risk management practices. Additionally, clients will receive the same
commodity law bankruptcy treatment and the added protection afforded customer
collateral under the CFTC's Legally Segregated Operationally Commingled (LSOC)
regime for all of their cleared CDS positions.
ICE Clear Credit's petition to provide portfolio margining had overwhelming
support from both buy-side and sell-side participants.
"Portfolio margining eliminates a key economic barrier to buy-side clearing by
recognizing margin efficiencies within hedged portfolios. This will facilitate
the buy-side's transition to central clearing ahead of the phase-in of the
clearing mandate this year," said Randall Costa, Managing Director at Citadel.
"Portfolio margining for buy-side accounts reduces systemic risk,
significantly improves the capital efficiency of clearing and provides a
proven and well understood regulatory regime for clearing index and single
name credit default swaps," said Scott Beardsley, Principal and Head of
Operations, BlueMountain Capital Management.
"Margin efficiency is a focus topic for the buy-side, given the amount of
margin that is required to be posted under the Dodd-Frank Act. This is a step
in the right direction, improving the capital efficiency of clearing and
providing a proven and well understood regulatory regime for clearing index
and single name credit default swaps," said Supurna VedBrat, Managing Director
and Co-Head of Electronic Trading and Market Structure at BlackRock.
ICE Clear Credit and ICE Clear Europe are the only clearing houses to offer
single-name CDS clearing.
ICE Clear Credit filed petitions with the CFTC and the SEC to provide
portfolio margining for proprietary and buy-side accounts in October of 2011.
ICE Clear Credit received regulatory approval in late 2011 for proprietary
positions and began portfolio margining for clearing members in January of
2012. Approvals for buy-side portfolio margining were granted in December 2012
by the SEC and on January 14, 2013 by the CFTC. ICE Clear Credit will launch
clearing of North American corporate single names and Latin American
sovereigns and portfolio margining for buy-side accounts this quarter.
ICE Clear Credit legally segregates customer collateral from clearing
participant proprietary collateral at all times. As a matter of law, customer
collateral cannot be used for obligations related to a clearing participant's
proprietary trading activities. It is a violation of ICE rules and CFTC and
SEC regulations to commingle customer collateral within proprietary accounts.
IntercontinentalExchange (NYSE: ICE) is a leading operator of regulated
exchanges and clearing houses serving the risk management needs of global
markets for agricultural, credit, currency, emissions, energy and equity index
products. ICE serves customers in more than 70 countries. www.theice.com
The following are trademarks of IntercontinentalExchange, Inc. and/or its
affiliated companies: IntercontinentalExchange, ICE, ICE and block design, ICE
Futures Europe, ICE Clear Europe, ICE Clear Canada, ICE Clear US, ICE Clear
Credit, ICE Futures U.S., and ICE OTC. All other trademarks are the property
of their respective owners. For more information regarding registered
trademarks owned by IntercontinentalExchange, Inc. and/or its affiliated
companies, see https://www.theice.com/terms.jhtml.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995 - Statements in this press release regarding IntercontinentalExchange's
business that are not historical facts are "forward-looking statements" that
involve risks and uncertainties. For a discussion of additional risks and
uncertainties, which could cause actual results to differ from those contained
in the forward-looking statements, see ICE's Securities and Exchange
Commission (SEC) filings, including, but not limited to, the risk factors in
ICE's Annual Report on Form 10-K for the year ended December 31, 2011, as
filed with the SEC on February 8, 2012, and ICE's Quarterly Reports on Form
10-Q for the quarters ended June 30, 2012, as filed with the SEC on August 1,
2012 and September 30, 2012, as filed with the SEC on November 5, 2012.
Contact: Media Contact: Brookly McLaughlin, Communications Director,
+1-312-836-6728, firstname.lastname@example.org; Investor Contact: Kelly
Loeffler, VP Investor Relations & Corp. Communications, +1-770-857-4726,
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