In other FinTech News, Dow Jones, Exiger and RDC partner to support a KYC joint venture.
The Intercontinental Exchange (ICE), owner of the New York Stock Exchange, other exchanges and clearinghouses, announced that ICE Clear Credit has surpassed $100 billion year to date in gross notional cleared for client accounts for single name credit default swaps (CDS), officials say. This marks a 200 percent increase over 2015.
The ICE Clear Credit clearinghouse for credit derivatives launched client clearing for single name CDS instruments in June 2013, officials say.
“Since launch, the number of clients actively clearing these instruments has grown consistently and is now over 100, with 90 percent of client volume occurring since the start of 2015,” officials say. Year to date, more than $100 billion notional in single name CDS has been cleared at ICE Clear Credit, compared with $33.3 “billion for the full year of 2015, an increase of 200 percent, officials add.
“The growth in client clearing at ICE Clear Credit has occurred in the absence of a regulatory single name CDS clearing mandate for clients and illustrates the benefits of central clearing, including operational and capital efficiencies, as well as counterparty protections,” ICE officials say.
“This is an important milestone for both ICE Clear Credit and the market as a whole,” says Peter Borstelmann, head of corporate development at ICE Clear Credit.
For Goldman Sachs, approximately 40 percent of the client-facing single name CDS volumes in “eligible North American reference entities have cleared year-to-date,” says Amy Hong, head of market structure for global credit products at Goldman Sachs, in a prepared statement. “We view this progress to be material and helpful in restoring market confidence in single name CDS,” Hong says.
Ritesh Shah, chief operating officer (COO) for global credit at Citadel, said that the firm “strongly supports the shift to central clearing of single name CDS, which will strengthen the market by increasing participation, fostering liquidity, and addressing counterparty credit risk concerns.”
Launched seven years ago, ICE Clear Credit and ICE Clear Europe clear “more than 500 single name and index CDS instruments based on corporate and sovereign debt,” ICE officials say. “ICE’s CDS clearinghouses have reduced counterparty risk exposure by clearing $80 trillion in gross notional amount of CDS instruments, with resulting open interest of approximately $1.4 trillion.”
In a related move, ICE recently launched ICE Swap, a platform for trading cleared single name CDS instruments in a central limit order book, ICE officials says. “ICE Swap leverages Creditex’s electronic trading technology and consolidates orders from both buy- and sell-side market participants to create a pool of liquidity for single name CDS.”
Dow Jones, Exiger & RDC Support KYC Joint Venture
The joint venture between IHS Markit and Genpact, dubbed kyc.com, has a strategic partnership with Dow Jones, Exiger and Regulatory DataCorp (RDC) to deliver “an end-to-end know your customer (KYC) process” for compliance, onboarding, sanctions, screening, negative media searches and client risk assessment, officials say.
The backers hope the alliance “will drive standardization and compliance across regulatory regimes and multiple jurisdictions,” officials say. Kyc.com has a market share of 72 percent of the G14 dealers and more than 2,100 buy-side firms and corporations.
The kyc.com service will be based on regulatory risk data and screening processing from RDC, officials say.
“The screening engine integrates RDC’s Global Regulatory Information Database (GRID) of over 7 million profiles with risk relevant information,” officials say. “Dow Jones Risk and Compliance will serve as the core data provider with over 2 million global sanctions records including those related to politically exposed persons (PEPs), state owned companies, relatives and close associates, special interest persons, adverse media and watchlists.”
Exiger will provide “near real-time public records media research” through an artificial intelligence product, DDIQ, “that systematically removes false positives and identifies risks across premium and open source content,” officials add. “DDIQ will also combine the findings from kyc.com, and the data provided by Dow Jones Risk and Compliance and RDC, to produce a defined client risk assessment score for appropriate escalation within user firms.”
Users can also access to Exiger’s financial crime experts to “assist in the design of policies and procedures to optimize system configuration,” officials add
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