LCH to Clear Credit Default Swaps for U.S. Clients

LCH.Clearnet Group Ltd. said it obtained regulatory permission to clear credit default swaps for U.S. members via its clearinghouse in Europe, a day after American and European Union authorities agreed to cut overlap.

The U.S. Commodity Futures Trading Commission gave the approval to Paris-based LCH.Clearnet SA, even as it considers LCH’s application to register as a derivatives clearing organization, or DCO. U.S. members can now clear proprietary CDS index trades through the unit, LCH said.

The CFTC and the European Commission yesterday said they broke a deadlock over whether the U.S. could impose its rules on trades booked in Europe. Banks and other swaps traders said the deal reduces the chance they will be forced to comply with conflicting regulatory regimes.

The decision “enables us to offer clearing services across the broadest range of OTC derivative asset classes and geographies in the market,” Ian Axe, LCH.Clearnet Group’s chief executive officer, said in a statement. “We look forward to continuing to work with the CFTC and other regulators as we grow our U.S. business.”

LCH, which is now majority-owned by London Stock Exchange Group Plc (LSE), is targeting growth in Asia and the U.S. The company in February last year appointed David Weisbrod, who spent 40 years at JPMorgan Chase & Co., to head its U.S. unit. LCH operates CDSClear and is also the world’s largest interest-rate-swap clearinghouse.

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