The world’s largest interest-rate swap clearinghouse LCH.Clearnet is for the first time weighing accepting corporate bonds as collateral in over-the-counter (OTC) derivatives market, Bloomberg reports. It may allow investment-grade corporate bonds as the only acceptable collateral, and the firm’s risk committees are assessing the plan.
Clearnet is looking to tap the likely boom in demand for a wider range of collateral in the $601 trillion OTC derivatives market. The market is gearing up to accommodate the new rules on the usage of clearinghouses by derivatives traders the U.S. Commodity Futures Trading Commission is expected to recommend on Tuesday.
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Clearnet U.S. Commodity Futures Trading Commission