Two of the goals of financial reform were to bring more products to clearinghouses and to give customers more choice. IntercontinentalExchange (ICE) recently announced an agreement with CME Group to link its straight-through-processing software, ICE Link, to CME Clearing to facilitate the clearing of credit default swaps (CDSs).
"The decision to connect up to CME was one driven by our customers," says Clive de Ruig, global head of ICE Link. "We have 450 buy-side firms and all the major dealers are using our platform on a daily basis. What the buy-side firms and dealers wanted was to make sure that they could execute anywhere and clear anywhere."
According to a CME Group spokesman, benefits are evident for all parties. "Providing connectivity through ICE Link and other providers is just another example of how we are working to expand straight-through processing capabilities for our clients," he said. The CME Group equivalent to ICE Link is CME ClearPort. The CME spokesman said there are no plans for a reciprocal link to ICE’s clearinghouse, ICE Trust.
The ICE Link-CME Clearing connection was among the first topics addressed at the Q&A following ICE’s earnings announcement earlier this month. "I think it’s a testament to our relationship with CME that we’re able to work together where it’s in the common best interest," Jeffrey Sprecher, chairman and CEO of ICE, said. "I think in this case, they have a very large infrastructure for clearing in the U.S. and are going to be launching many asset classes and we have a very large footprint of connectivity to the OTC market, so the two of them came together."