Services

Central Clearing

Members of the International Derivatives Clearinghouse are able to clear and settle new and existing OTC interest rate swaps through a CFTC regulated Derivatives Clearing Organization. Swaps are cleared on an agent basis by Clearing Members of IDCH. Clearing members clear both house and client business after execution has taken place.

The International Derivatives Clearinghouse offers market participants the ability to maintain their current execution relationships, but utilize the benefits of central clearing. Post execution, the swaps are novated to IDCH through market standard affirmation platforms and upon acceptance of the transaction, IDCH steps in as the central counterparty to the transaction.

IDCG currently offers Clearing Members and their clients the ability to clear OTC swaps or as swaps or as futures, please contract IDCG with any questions.

Benefits of Central Clearing

Distributed risk through a central clearing agent
Client margin housed in bankruptcy remote accounts
Pre and Post Default portability of margin
Increased available credit
Increased transparency
Lower systemic risk
Uniform risk standards and protocols

IDCG Swap Curve ™

IDCG constructed a real-time swap curve - IDCG Swap Curve™ that is used to value the existing portfolios and provide simple, replicable and transparent tool for market participants.

Contract Details

Please refer to the Rules of the International Derivatives Clearinghouse for complete OTC and Exchange Listed contract specifications.

Rules of International Derivatives Clearinghouse, LLC

Transaction Comparison

	IDCH	Current OTC Bilateral
Pre-Trade	Establish relationship with a clearing member Provide initial margin	Negotiating master agreements is a prerequisite ISDA Agreement Collateral Agreement Counterparty credit review Establish credit and trading limits
Trade	Execute trade bilaterally or electronically for clearing via IDCH No curve negotiation: transparent IDCG Interest Rate Curve	Two parties agree to transaction Usually over the telephone Potential for asymmetric information among participants Yield curve negotiation
Post-Trade	Receive trade details via SwapDrop™ Position is marked-to-market and margin account is adjusted Settlement bank handles cash flows	Trade capture Manual or Automated Economic affirmation Conterparties verify key economic details Confirmations required Either one party provides trade details and the other verifies; or both parties submit trade details and both parties match confirm
Aggregate Time to Complete Trade	1 day	9 days on average during 2006*

*According to ISDA 2007 Derivatives Benchmark Survey

Margin Relief

IDCH offers tenor-based initial margin relief for risk offsetting positions.

Click to view IDCH Bulletins

Regulatory References

Document Name
CFTC Regulation 1.35
CFTC Regulation 1.38
Commodity Exchange Act 2000

"Central clearing helps markets to grow, providing more transparency and certainty to all market participants no matter where they are in the food chain. We are looking forward to being part of a macro solution in this area."