LCH won’t back single fix for swaptions switch
Clearing house pledges to “support” multiple solutions to discounting problem
Clearing house LCH will not develop an industry-wide method for compensating swaptions holders when the benchmark for interest rate swaps shifts to new risk-free reference rates next year.
A senior figure at the clearer told a conference on October 31 that he viewed the change as a “bilateral issue” to be thrashed out by swaptions counterparties on a case-by-case basis.
The firm’s position will affect the majority of swaptions holders whose contracts reference swaps cleared at LCH.
“I don’t
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