Mandatory Clearing, June 10, Day 3, Cleared Volumes Rise

Following on from yesterdays article, I wanted to provide an update on Day 3, June 12.

Firstly that the Cleared trade count has increased substantially on June 12, to 1,302, an increase of 35% from the June 11 figure of 965.

USD Cleared Swaps Counts 3-12 Jun
Secondly that the Uncleared figure has remained low at 157 trades.
USD Uncleared Swaps Counts 3-12 Jun

These figures start to show that the likely trend is that all the volume of Uncleared Swaps prior to June 10 is moving into Cleared Swaps and not to Swap Futures or Bond Futures.

The inference from this is that all or a large majority of Category II firms were able to meet the mandatory deadline and not fail to do so as had been conjectured in the press.

A graph of total USD Swap trade counts over this period shows that the sum of Cleared and UnCleared is as high or higher than prior to the deadline.

USD Swaps Counts 3-12 Jun

However we must wait to see if this trend continues over the coming weeks or stalls.

And for those of you that cannot wait for my next blog, I encourage you to check for yourself with SDR View.

One other point to note is that if we look back over a longer period (from May 6), we can see that there has actually been an increase in Cleared Swap volumes leading up to the June 10 date, starting from May 28 or 10 days prior to the deadline.

USD Cleared Swaps 6May-12 Jun

As one commentator put it nicely yesterday, this may be due to buy-side firms testing the pipes before the deadline.

Or perhaps simply not waiting for the last day rush to start to clear all their new swaps.

What is harder to understand is that the volumes of Uncleared Swaps also increased in a similar fashion.

USD Uncleared Swaps 6may-12Jun

This may be due simply to increased market volatility in the first two weeks of May (Fed Stimulus news items?).

Or the fact that buy-side firms decided to bring forwarded some of their planned swap activity to take advantage of the ability to put on uncleared long term swaps prior to the deadline.

Either way post deadline, we can see that Uncleared Swaps have fallen sharply.

Signalling a successful effort by many firms to meet the deadline; congratulations to all involved.

We live in interesting times.

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