OSTTRA moves $330bn of open interest out of ICE Clear Europe with triBalance solution

Rick Steves

“The efficiency seen within this process demonstrates the unique capabilities and central position of OSTTRA within post-trade workflows for credit derivatives, which has allowed for the smooth, timely running of such an impactful transition within the industry.”

OSTTRA has completed its latest migration cycle run to move open interest (OI) out of ICE Clear Europe through its counterparty risk optimization service triBalance, the global post-trade solutions network announced.

After 9 cycles, OSTTRA has successfully moved $330bn of OI for single name and index cleared credit default swaps (CDS), with ICE Clear Europe credit clearing closure reaching the 85% completion mark for open interest transferred.

The series of migration cycles since January 2023 is enabling firms to reduce OI substantially as the closure of ICE’s European CDS clearing service (ICEEU) later this year inches closer.

Following ICE Clear Europe’s decision to exit the CDS clearing business, market participants need to migrate their positions from ICE Clear Europe to either ICE Clear Credit or LCH SA.

OSTTRA migrated 65% of total Index DTO/MAT following regulatory exemptions

The migration is aimed at reducing open interest and move firms’ residual positions to alternative clearing houses, namely LCH CDSClear and ICE Clear Credit (ICC), the US equivalent of ICE’s European credit clearing entity.

Over 99% of Single Names CDS positions and 77% of the Indices have now been moved to alternative central counterparties (CCPs), OSTTRA announced.

Following recent exemptions granted by regulators, the latest cycle addressed 65% of the total Index DTO/MAT series (on-the-run and first-off-the-run, which together constitute approximately 37% of total Index OI).

As of 30 March 2023, regulators have provided a time-limited exemption, to allow for the inclusion of the instruments that were previously restricted, until the closure of the CDS clearing service at ICE Clear Europe, to aid firms with the risk moves.

Nikki Einarsson, Business Development Manager at OSTTRA triBalance, said: “The results of the most recent of the transition cycles mark a significant milestone ahead of the ICEEU closure. The efficiency seen within this process demonstrates the unique capabilities and central position of OSTTRA within post-trade workflows for credit derivatives, which has allowed for the smooth, timely running of such an impactful transition within the industry. We are very pleased with the ability of our service in supporting this industry migration, and we look forward to continuing with the remaining cycles.”

From $190bn to $330bn of OI reduced in two months

In early May, OSTTRA announced it had delivered a reduction of more than $190 billion equivalent in open interest in Indices and selected Single Name CDS at ICE Clear Europe. Approximately 50% of the Indices and between 85% and 98% of Telecom, Technology, Utilities, Basic Materials, Energy, Healthcare and Consumer Goods and Services Single Name CDS positions were closed out.

Two months later, the figure has grown to $330 billion of OI for single name and index cleared credit default swaps (CDS).

With a central role in post trade workflows for credit derivatives, OSTTRA is uniquely placed to support the industry in a robust, cost-efficient and timely transition. The solution combines the extensive risk transfer and optimisation capabilities of OSTTRA triBalance, with trade processing via OSTTRA MarkitWire and TradeServ to ensure new positions are accurately reflected at CCPs and in the Trade Information Warehouse.

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