International Derivatives Clearing Group, LLC


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International Derivatives Clearing Group

Founded	2007
Headquarters	New York
Key People	Founder and Chairman of the Board, Vincent Viola;Chief Executive Officer, Garry N. O’Connor
Products	Central Clearing for Interest Rate Derivatives
Twitter	@IDCG_Clearing
Website	www.idcg.com

International Derivatives Clearing Group (IDCG), operating under the name LCH.Clearnet LLC, was cited as a dormant derivatives clearing organization by the U.S. Commodity Futures Trading Commission in May 2019.^[1]

Background[edit]

International Derivatives Clearing Group (IDCG) offered clearing for over-the-counter (OTC) interest rate swaps built out of futures positions that in total replicated the swap contract.

IDCG was owned by LCH.Clearnet Group Limited, which acquired the company from The NASDAQ OMX Group, Inc., former NYMEX president Bo Collins and other investors in August 2012. IDCG was subsequently renamed LCH.Clearnet LLC.^[2] ^[3]^[4]

IDCG's subsidiary, International Derivatives Clearinghouse (IDCH), was a CFTC-regulated derivatives clearing organization for clearing and interest rate derivatives. IDCH used the exchange of futures for swaps (EFS) function to convert OTC derivative contracts into economically equivalent futures contracts. IDCG claimed that by utilizing the EFS process, IDCG could provide customers the benefits of central clearing while maintaining the principles and economics of the OTC market.^[5]

The NASDAQ OMX Futures Exchange (NFX), a wholly owned subsidiary of NASDAQ OMX, listed the futures contracts cleared by IDCH. The IDCH platform was built on a combination of NASDAQ OMX SECUR clearing technology and Razor Risk technology.

History[edit]

March 2007 -- IDCG is founded by Vincent Viola and John Shay
March 2007 to September 2008 - Senior management team is assembled: Michael Dundon, Gerry Lawlor, Alan Sobba, Robert C. Push, Jeffrey Tannenbaum, and Gerard Kopera
May 2008 -- NASDAQ OMX becomes strategic partner and investor
June 2008 -- Razor Risk Technologies becomes risk management partner
August 2008 -- IDCG files DCO application with the CFTC
December 2008 -- IDCG Clearinghouse goes live. NASDAQ OMX becomes majority stakeholder in IDCG
June 2009 -- Bank of New York Mellon Corp. acquires a minority stake in IDCG.
June 2009 -- Shadow Clearing is Launched
September 2009 -- Shadow Clearing volumes exceed $1 Trillion
December 2009 -- Shadow Clearing volumes exceed $3 Trillion
January 2010 -- IDCG appoints Garry N. O’Connor as CEO of IDCG^[6]
April 2010 -- IDCG announces new clearing products:

US Dollar Interest Rate Swap vs. 1 Month Floating Rate
US Dollar Forward Start Interest Rate Swap vs. 1 Month Floating Rate
US Dollar Overnight Index Swap
US Dollar 1 Month Forward Rate Agreement (FRA)
US Dollar 3 Month Forward Rate Agreement (FRA)^[7]

September 2010 -- State Street Global Markets becomes IDCG Clearinghouse (IDCH) member.^[8]
June 2011 -- IDCG enhances clearing platform^[9]
August 2012 -- IDCG acquired by LCH.Clearnet Group Limited; IDCG renamed LCH.Clearnet LLC
January 2013 -- LCH.Clearnet LLC approved to clear swaps qua swaps

Products and Services[edit]

IDCG’s centrally cleared IRS futures contracts are economically equivalent to plain vanilla IRS contracts traded in the OTC market. Currently IDCG is able to clear spot, aged, and forward starting US Dolllar denominated plain vanilla interest rate swaps out to a 30 year maturity. Customers are able to trade these contracts bilaterally in the OTC market and then give up the trade to IDCH through a Web portal known as SwapDrop.com.

On Apr. 28, 2010, IDCG announced that it would clear the following over-the-counter (OTC) interest rate derivative products through its clearinghouse: US Dollar Interest Rate Swap vs. 1 Month Floating Rate, US Dollar Forward Start Interest Rate Swap vs. 1 Month Floating Rate, US Dollar Overnight Index Swap (OIS), US Dollar 1 Month Forward Rate Agreement (FRA) and US Dollar 3 Month Forward Rate Agreement (FRA).