Nasdaq's swap clearer says acting on U.S. plan

By Jonathan Spicer

NEW YORK (Reuters) - The head of an upstart U.S. clearinghouse expects to speed up a planned expansion of interest rate swaps and other products, after the Obama administration proposed a clampdown on the market last week.

Christopher Edmonds, chief executive of the International Derivatives Clearing Group, also said he expected new participants to emerge as regulators move the over-the-counter market into the light, adding that regulators may reward banks that embrace the transition.

IDCG is 80 percent owned by Nasdaq OMX (NDAQ.O), which runs the Nasdaq Stock Market. Exchange operators that own clearinghouses are expected to benefit from the regulatory shift because they can earn fees from derivative traders whose transactions they clear.

"We have to be prepared to act, based on last week's comments, probably sooner than we had anticipated," Edmonds said in an interview. "I would set that time frame early in (the third quarter)."

IDCG began clearing U.S. interest rate swaps in January. Nasdaq originally wanted IDCG to clear non-U.S. denominated interest rate swaps by the end of the year. It has said euro-denominated swaps would come first, followed by other G7 currencies.

Nasdaq and IDCG would not provide clearinghouse volumes, seen by analysts to be very light so far. The swaps allow investors to exchange future interest payment obligations.

Nasdaq wants banks and others to take stakes in IDCG and drive business there.

Business may also ramp up after Treasury Secretary Timothy Geithner said he would require all OTC derivatives, products that base their value on other assets, to be cleared through regulated central counterparties in an effort to avoid a repeat of the current credit crisis.