The Clearing Corporation (C-Corp) is clear favorite to
handle clearing for the new exchange being formed by a dozen
large financial firms, in a move that could breathe further
life in the clearing house.
Code named Four Seasons, six of the firms in the
exchange consortium are also stockholders in C-Corp, which
sources have identified as a strong indication that the US
company will become the new entitys clearer. A decision
could be made in the coming week during the next C-Corp board
meeting. C-Corp would not comment on the matter.
A source familiar with C-Corp told FO Week that even though
nothing has been announced yet, the overlap in C-Corp and the
Four Seasons roster is not a coincidence.
All of these things are coordinated to some degree, even
if they are not publicly announced, the source
C-Corp completed a corporate restructuring on December 20,
ousting its minority members with a buyout and reducing the
stakeholders to a group of 17 firms, mostly large
Among the dozen banks that are taking on part of the consortium
and also C-Corp shareholders are: Bank of America, Citigroup,
Credit Suisse, Deutsche Bank, JPMorgan and Merrill Lynch.
Whether the new exchange is designed to pose a serious threat
to CME Group benchmark products, as has been suggested in some
circles, or simply stand as token competition to hold CME fees
in check is unknown. Executives from some of the large firms
considered Eurex US to be a success because it helped lower
Chicago Board of Trade fees and forced the exchange to innovate
and cater to its big-time customers.
Some firms look at Eurex US as having lost the battle but
winning the war, said Mike Manning, president and CEO of
Rand Financial in Chicago.
Should C-Corp handle clearing for the new exchange, it would
put some new wind in the sales of the maligned clearing house.
C-Corp is also the centerpiece for the Wall Street firms
who are looking to offer cleared OTC products including credit
Theyve at least got deep pockets again and
potentially new business on the horizon, said the source.
They are going to be the vehicle of choice for investment
banks to make the OTC swaps markets more efficient and will be
the counter to the CME.
Other potential clearing venues for the new venture could
include LCH Clearnet or ICE Futures soon to be set up
clearing house which it acquired as part of the New York Board
if Trade deal. Neither of these alternative venues would
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