Data shows OTC notionals shrank as clearing started in US
When a small group of firms became subject to the first US clearing mandate in March, outstanding notionals for clearing-eligible products temporarily dipped. With a larger group of firms set to start clearing in June, could it be a sign of things to come? Peter Madigan reports
The index credit default swap (CDS) market enjoyed a strong start to the year, with outstanding gross notionals up 11.7% by Friday, March 8 for trades between dealers (see figure 1). The same was true for the interest rate swap market – up 8.9% for the year, as of the same date, between all participants. Then, both markets experienced a mini-slump. According to Depository Trust & Clearing Corporation (DTCC) data, index CDS notional fell for three straight weeks. This is odd, because that period
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