GFI Group Inc. (Nasdaq: GFIG) and ICAP plc (IAP.L), global leaders in inter-dealer brokerage of OTC derivative products, announced today that they plan to jointly develop new clearing services for OTC derivative products with The Clearing Corporation, one of the worldâs oldest, independent clearinghouses for derivative instruments, and have agreed each to acquire a minority ownership interest in The Clearing Corporation. In addition, The Clearing Corporation has agreed to appoint one GFI/ICAP representative to its Board of Directors.
The Clearing Corporation is a private Delaware corporation, based in Chicago, which serves major dealers and participants in the worldwide marketplace for derivative products, many of who are stockholders.
GFI and ICAP intend to work with The Clearing Corporation to jointly develop clearing services for OTC derivative products, including credit and interest rate derivatives. The Clearing Corporation will continue to function as an independent entity.
The establishment of a centralized clearing mechanism should allow market participants to more effectively net offsetting transactions, while boosting capacity through the elimination of backlogs and lengthy settlement times in the OTC markets.
Michael Gooch, Chairman and Chief Executive Officer of GFI, said: âThis investment confirms our commitment as leading inter-dealer brokers to developing clearing capabilities and solutions for OTC derivative products. It complements our hybrid electronic platforms, ATS facilities and straight-through-processing capabilities. Ultimately, we believe that centralized clearing will further expand the market for OTC derivative products through added settlement efficiency and reliability.â
Michael Spencer, Group Chief Executive Officer of ICAP, said: âThe expansion of independent clearing facilities is an important step in the continuing growth of the global OTC markets. The membership of The Clearing Corporation includes some of the most active participants and customers in these markets. Together, we will support The Clearing Corporationâs mandate to develop clearing capabilities for new financial derivative products that will benefit all market participants.â
Michael C. Dawley, Chairman of The Clearing Corporation commented: âGFIâs and ICAPâs investment in The Clearing Corporation demonstrates the value our independent and flexible clearing model brings to the marketplace. We look forward to working with GFI and ICAP and welcome them as additional strategic partners.â