LCH completes clearing of its first €STR swaps 21 October 2019London Reporter: Maddie Saghir
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LCH has cleared its first euro interest rate swaps referencing the euro short-term rate (€STR), making it one of the first clearing houses to offer the swaps benchmarked to the new reference rate.
Morgan Stanley and LBBW, the parent company of three commercial banks, were among the first participants to clear derivatives using the new rate, which was first published on 2 October.
According to LCH, it introduced clearing of €STR swaps as the industry adopts new interest rate benchmarks.
The move follows LCH’s launch of clearing for swaps with the Secured Overnight Financing Rate in July 2018, Sterling Overnight Index Average futures in April 2018, and Swiss Average Rate Overnight swaps in October 2017.
Thilo Rossberg, head of fixed income, currencies, and commodities markets at LBBW, said: “We’re encouraged by the swift introduction of clearing for this product, as it’s a vital step for the development of a vibrant market. €STR is taking over, and we aim to be a reliable partner and liquidity provider in €STR swaps.”
“Besides underlining our ambitions of being a reliable liquidity provider for our clients, this €STR-trade was moreover helpful in managing our overall risk position.”
Meanwhile, Andrew Millward, European head of macro trading at Morgan Stanley, added: “We anticipate that €STR swaps will inherit much of the pre-existing liquidity from the EONIA swaps market and are expecting strong investor demand from the out-set.”
“As an active participant in the global derivatives market, we are delighted to offer this cleared product to our clients.”
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