Citi group has announced the completion of the first centrally cleared inflation swap for a European buy-side client.
The swap was cleared on behalf of investment manager Robeco and cleared through LCH Clearnet’s SwapClear service.
LCH Clearnet’s SwapClear was launched as the first CCP to clear inflation-linked swaps back in April 2015.
In a press statement today, Citi said that the option to centrally clear inflation-linked swaps is an important milestone in the further growth of the cleared derivatives market.
The company said that because asset managers and pension funds are seeking more efficient ways to hedge their portfolios and / or liabilities against rising inflation, the new service is likely to appeal.
It is hoped that, by clearing these instruments, investors can avoid market fragmentation and gain significant netting advantages.
Peter van der Spek, director of customized overlay management at Robeco, said:
“Robeco is a long-term advocate of central clearing of standardized OTC derivatives.
“In Q4 2011 we were one of the first European asset managers to move to central clearing for all our investment funds’ interest rate swaps and we have been keen to expand to other instruments once available for clearing.”
Silas Findley, EMEA head of Futures, Clearing and Collateral at Citi, added: “We remain highly-focused on meeting the increased demand of our clients in the futures, clearing and collateral management space and our partnership with Robeco to flawlessly execute this transaction highlights our commitment to providing best-in-class derivatives clearing services.”