Posted on 03/04/2009 7:03:59 PM PST by TigerLikesRooster
ICE Trust Receives Approval From Federal Reserve to Clear Credit Default Swaps
--ICE Expects to Complete TCC Acquisition within Week; Clearing of Existing North American CDS Indexes to Begin Thereafter
NEW YORK, March 4, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- IntercontinentalExchange(R) (NYSE: ICE), a leading operator of regulated global futures exchanges and over-the-counter (OTC) markets, today announced that ICE US Trust, LLC (ICE Trust), a New York limited liability trust company, has received regulatory approval from the Board of Governors of the Federal Reserve System to become a member of the Federal Reserve System and to serve as a clearing house and central counterparty for credit default swap (CDS) transactions. Pending the receipt of all required regulatory approvals, ICE anticipates closing its acquisition of The Clearing Corporation (TCC) within a week. On March 2, ICE and TCC received early termination of the Hart-Scott-Rodino waiting period from the U.S. Department of Justice.
TCC has developed the CDS risk management framework, operational processes and infrastructure for ICE Trust's clearing operations. Upon closing the transaction, ICE Trust will begin processing and clearing positions held by the members of the clearing house. Clearing of North American CDS indexes will be followed by liquid single-name credit default swaps.
About IntercontinentalExchange
IntercontinentalExchange(R) (NYSE: ICE) operates regulated global futures exchanges and over-the-counter (OTC) markets for agricultural, energy, equity index and currency contracts, as well as credit derivatives. ICE(R) offers these markets to participants around the world through its technology infrastructure and trading platform, together with clearing, market data and risk management services. ICE Futures Europe(R) is ICE's regulated energy futures exchange. ICE's regulated North American exchanges, ICE Futures U.S.(R) and ICE Futures Canada(TM), offer markets for agricultural and financial contracts. Creditex, a market leader in trade execution and processing for credit derivatives, is also a wholly-owned subsidiary of ICE. A member of the Russell 1000(R) and S&P 500 indices, ICE is headquartered in Atlanta, with offices in New York, London, Chicago, Winnipeg, Calgary, Houston and Singapore. www.theice.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 - Statements in this press release regarding IntercontinentalExchange's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC on February 11, 2009.
SOURCE IntercontinentalExchange
Ping!
how will they price this junk when no one knows the value?
Does Obama approve of this? Does he even know?
silly yourself.
Clearing is exactly what CDSs haven't been doing.
Clearing, for those in Rio Linda, means offsetting one person's trades against everyone else's, so that each person only has one overall net position against the whole world, instead of forty gazillion separate side bets with everyone he ever met in his life.
When Bank of America make one bet one way with a client and another bet the other way with Goldman, right now it keeps both bets forever. With clearing, it is "out" and the client and Goldman each have one bet - with the whole exchange, not each other.
That is clearing. And on its own it would reduce the volume of outstanding CDS contracts oh, about 98%.
The whole exchange is also guaranteed by all of its members, who all pledge to pay if anyone who clear there welshes or can't. This ends the worry over whether the specific counterparty can pay. CDSs when to "squared" quotes last September with AIG folded, because they combined two risks - first that the underlying bond wouldn't pay, and then that the CDS counterparty wouldn't pay because he'd be broke. Lots of scared people interpreted this as a huge increase in the risk of bankruptcy of everyone on earth.
And the point of the article is that ICE, the exchange in question, needed regulatory approval to act as a clearing agent in previously over-the-counter contracts.
Ignorance and impertinent is no way to go through life...
Sorry, JasonC. I was simply being sarcastic. You are telling me what I already know and preaching to the chior.
Lehman unwound without the world imploding. This is a good thing and I get it.
Didn’t think to use a sarcasm tag.
I am not in Rio Linda. My uncle was, but now he’s in Rancho Cucamonga.
Thank you for the clear explanation.
Is THIS what was meant when everyone in authority speaks of the credit markets being clogged and not just regular commercial/consumer credit?
And was fear of “risk of bankruptcy of everyone on earth” the catastrophe that had all of official Washington in utter terror last Fall?
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