MPS Capital Services (MPS), a wholly owned subsidiary of Banca
Monte dei Paschi di Siena S.p.A., Barclays Capital, the investment
banking business of Barclays Bank plc, and LCH.Clearnet Ltd
(LCH.Clearnet) today announced that MPS has signed an agreement to
clear interest rate swaps on LCH.Clearnet’s SwapClear service
through Barclays Capital. The transaction represents the first
major client clearing mandate for backloaded trades.
Barclays Capital is the primary clearing broker for MPS’s
interest rate swap transactions under an agreement that includes
the backloading of a significant portion of MPS’s historical
interest rate swap transactions, a first for client clearing.
The total notional value of interest rate swaps to be backloaded
is in excess of $200 billion, with a material portion of that
backloading already undertaken, including dollar, sterling and euro
swaps with multiple counterparties.
“This agreement is an important step for MPS in developing a
leadership position in OTC Derivatives. MPS is fully supportive of
the expected EU regulatory reform towards central clearing,” said
Matteo Bertotti, Head of Fixed Income Derivatives at MPS Capital
Services. “Barclays Capital has displayed a clear commitment,
leadership and readiness to adapt to these new market developments.
MPS was pleased to extend its long history of working with Barclays
Capital through this transaction.”
By backloading and clearing future interest rate swap
transactions, MPS will benefit from reduced counterparty risk,
potential capital relief, a more efficient collateral management
process and lower overall operational risks.
“This is a clear milestone in the work to take the clearing of
OTC interest rate swap transactions beyond the dealer-to-dealer
level. OTC clearing represents a significant technology challenge
for the industry and we are proud to be able to extend our leading
position in clearing by being the first broker dealer to backload a
substantial portfolio,” said Ajay Nagpal, Head of Prime Services at
Barclays Capital.
Harry Harrison, head of Rates Trading at Barclays Capital,
added, “Central clearing will play a critical role in the
development of the rates market - and other asset classes - by
reducing counterparty risk, enhancing liquidity and bringing
greater transparency and efficiency. From our position as one of
the leading interest rates platforms in the industry, we see a
tremendous opportunity to introduce the benefits of central
clearing to our clients and hope that this transaction with MPS
will be the first of many.”
Michael Davie, CEO of the SwapClear service at LCH.Clearnet
said, “We congratulate our partners MPS and Barclays Capital for
this landmark transaction. This is an important step for the OTC
market and the buy-side community as a whole and reflects the
prevailing impetus to reduce systemic risk through central
clearing. In choosing SwapClear to clear their trades and legacy
portfolio, MPS will benefit from the proven experience, robustness
and scope of the service. Our goal is to continue to work with
clients and clearing members alike to reduce risk, reduce costs and
improve market transparency.”
Barclays Capital’s OTC Derivatives Clearing business is a
multi-asset class offering and part of the firm’s Prime Services
business. A dedicated team of professionals across the globe
provides clients with support for all OTC derivatives clearing
related requirements, in coordination with Barclays Capital’s
leading credit, interest rates, foreign exchange, equities and
commodities businesses. In December 2009, Barclays Capital was the
first broker to clear client credit default swaps (CDS) and
interest rate derivatives. Global Custodian recognized this
leadership by awarding the firm 106 ‘Best in Class’ awards in their
2010 OTC Derivatives Prime Brokerage Survey. Through BARX, Barclays
Capital’s online trading platform, clients can benefit from
straight-through processing, clearing and reporting of OTC
transactions.
About MPS Capital
Services
MPS Capital Services is the Investment Bank of Banca Monte dei
Paschi Spa, the third Italian Banking Group, created in 2007
through the integration of MPS Finance, the high reputated
Investment Bank, and MPS Banca per l’Impresa, the Bank for project
finance, corporate finance and special lending.
About Banca Monte dei Paschi
di Siena
Banca Monte dei Paschi di Siena, founded in 1472 is considered
to be the oldest bank in the world. Today’s parent company of
Italy’s third largest banking group, the bank holds significant
market shares in all areas of business.
The Montepaschi Group is present all over Italy and in the major
international financial centres, with operations ranging from
traditional banking activities to Private Banking (mutual funds,
wealth management, pension funds, and life insurance policies) and
Corporate Banking (project finance, merchant banking, and financial
advisory), with a special vocation for household accounts and small
and medium enterprises. With some 33,000 employees and over 3,000
branches, the Montepaschi Group offers its services to more than
six million customers.
About Barclays
Capital
Barclays Capital is the investment banking division of Barclays
Bank PLC. With a distinctive business model, Barclays Capital
provides large corporate, government and institutional clients with
a full spectrum of solutions to their strategic advisory, financing
and risk management needs. Barclays Capital has offices around the
world, employs over 25,000 people and has the global reach,
advisory services and distribution power to meet the needs of
issuers and investors worldwide. For further information about
Barclays Capital, please visit our website
www.barclayscapital.com.
About SwapClear
LCH.Clearnet’s SwapClear service is the global leader for over
the counter (OTC) Interest Rate Swaps clearing. It currently clears
more than 40% of the interest rate swap market, representing trades
with a total notional principal of $229 trillion*.
Launched in 1999 by LCH.Clearnet, SwapClear now clears swaps in
14 currencies; USD, EUR and GBP out to 50 years, AUD, CHF, SEK and
JPY out to 30 years and the remaining 6 currencies out to 10 years.
It also clears OIS out to 2 years in USD, EUR, GBP and CHF.
In December 2009, responding to market demand, SwapClear
extended its No. 1 clearing service to the buy-side.
*As of end of June 2010
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