21 October 2016
Reporter: Drew Nicol

CMF: IRS swaps under pressure

The rise of central clearing might have sent the traditional swaps market into a death spiral, according to a speaker at Fleming's Collateral Management Forum in Amsterdam.

Delegates at the conference heard that the notional value of uncleared interest rate swaps (IRS) has been in free fall since 2014 and still shows no sign of slowing.

Since June 2014, as much as $48 trillion has been wiped off the notional value of the IRS market, bringing the total value down to $74 trillion as of the end of 2015.

The speaker emphasised that some saw the introduction of central clearing as the death knell for the "old-style swaps market".

According to the speaker, some of these "doomsday sayers" have predicting that up to 90 percent of notional value will disappear from the market over the next five years as a new margining framework takes effect.

However, when polled on the topic, conference attendees presented themselves as far more bullish, with 71 percent acknowledging that the situation was 'bleak' but believed this was just a transitional phase for the swaps market.

"I think the doomsday sayers are being a bit extreme and I agree with the audience that this is a transitional phase," concluded the speaker.

More swaps news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
LCH launches new SwapClear client account
14 August 2017 | London | Reporter: Drew Nicol
J.P. Morgan and Aviva Investors are among the first adopters of this new account type
OneChicago expands futures products
05 July 2017 | Chicago | Reporter: Drew Nicol
The new No Dividend Risk Friday Futures will be available from 24 July 2017
French elections revive European markets
03 May 2017 | Frankfurt | Reporter: Drew Nicol
The first round of the French election prompted rallies in Europe’s beleaguered equities markets, while fixed income also saw sharp corrections, according to Eurex
Eurex secures KfW as IRS clearing client
05 April 2017 | Frankfurt | Reporter: Drew Nicol
German government-owned investment bank KfW has looked to Eurex Clearing for IRS clearing services
Traiana enhances swaps offering
27 February 2017 | London | Reporter: Drew Nicol
Traiana has launched a new suite of services to allow swaps providers to electronically manage payments and confirmations in equity swaps
BrokerTec eyes up e-MID purchase
27 January 2017 | London | Reporter: Drew Nicol
BrokerTec is on track to acquire a controlling majority stake in e-MID SIM, the first Italian electronic central limit order book platform for inter-bank deposits and overnight indexed swaps...
CME boasts record-breaking peso IRS activity
19 January 2017 | Chicago | Reporter: Drew Nicol
Derivatives marketplace CME Group achieved a record-breaking January trading day by clearing more than MXN 1 trillion (USD 45.53 billion) interest rate swaps in a single session...