Nasdaq OMX readies for interest rate swap battle

* IDCG to be a ‘vibrant competitor’ against LCH and CME

* 60 to 90 days to overcome technical connection barriers

By Jonathan Spicer

NEW YORK, April 30 (BestGrowthStock) – Exchange operator Nasdaq OMX
Group Inc (NDAQ.O: ) was at its most aggressive yet on Friday,
saying it will take on LCH.Clearnet and CME Group Inc (CME.O: )
in the nascent market for clearing interest rate swaps.

Chief Executive Robert Greifeld said the company’s majority
owned clearinghouse, International Derivatives Clearing Group,
or IDCG, is in the final stages of customer testing and expects
to add new members — including “a large clearing firm” — in
the next several weeks.

“We expect to be a vibrant competitor in this space in the
months to come,” Greifeld said on a conference call for
quarterly results, where he fielded several questions on IDCG.

“There is a very small number of customers in the industry
who are not testing with us at this point, or who are not
engaged with us in a productive way. Certainly the IDCG office
is very busy.” For the results, see: [ID:nN30109313]

The $400 trillion market for interest rate swaps is center
stage as lawmakers and regulators on both sides of the Atlantic
push more derivatives through clearinghouses and exchanges to
avoid a repetition of the financial crisis.

The U.S. Senate is now poised to debate new legislation.
Fannie Mae (FNM.N: ) and Freddie Mac (FRE.N: ), the giant mortgage
lenders, are expected to run their swaps through clearinghouses
before year end. [ID:nN11247530] [ID:nN10126260]

Companies have meanwhile scrambled to launch clearinghouses
for the influx of new products. LCH.Clearnet, Europe’s top
independent clearer, is the incumbent and favorite of dealers,
but could face regulatory hurdles given its London base.

Chicago-based CME Group, the world’s biggest derivatives
exchange operator, also plans to clear the swaps, which
represent the largest slice of a vast over-the-counter
marketplace now under the microscope.

“The legislative expectations dovetail quite nicely with
the product offering that IDCG has built,” Greifeld said,
adding that IDCG expects to have worked through technical
barriers involved in connecting customers in the next 60 to 90

Dealers control the private market and stand to lose out on
revenues as clearing and perhaps trading is moved to
transparent venues.

“The dealers are talking to us because they are receiving
pressure from their customers to do so and we’re probably not
their first choice with respect to the clearinghouse that they
would pick if they had complete control of the decision,”
Greifeld acknowledged.

“We’re anxious to get the first trade. We just have to have
the plumbing right.”

Stock Market Today

(Reporting by Jonathan Spicer; editing by Andre Grenon)

Nasdaq OMX readies for interest rate swap battle