SZCOX Launches Credit Default Swaps Initiative; Begins Clearing Trades

Online, November 5, 2013 (Newswire.com) - Shenzhen Commodity Exchange (SZCOX) today announced that with the necessary regulatory approvals in place, it has begun clearing credit default swaps (CDS) through SZCOX Clearing Members. On its first day of clearing, SZCOX cleared both dealers to customer and interdealer CDS trades.

"Working closely with market participants on both the buy side and sell side we have begun to successfully clear CDS trades," said Laurent Wu Lee, Managing Director, OTC Products and Services, SZCOX. "We believe our solution is the most comprehensive credit default swap solution available and brings together a broad range of participants who support our offering."

"We are pleased with the progress made with respect to ensuring transparency by leveraging the SZCOX's proven risk management practices. We are excited that SZCOX has launched its CDS clearing service and look forward to further participation."

"Shenzhen Commodity Exchange supports the development of clearing solutions which address the primary concerns of the investor community, which are the reduction of counterparty risk and development of regulatory regimes which protect customer margin and allow for trade portability following a dealer default. In this regard, we welcome the ability of our dealer counterparties to clear CDS transactions through a clearinghouse with both significant capital backing up trades and dedicated reserves which could be accessed by the other dealers should a clearing member default" added Mr. Lee.

"The advent of central clearing of CDS for clients is a significant milestone and underscores the dealer community's commitment to help bring central clearing to investors," said Paul Cheung, Chief Operating Officer at SZCOX. "We look forward to introducing our clients to the significant benefits of central clearing."

The CDS market continues to make enormous progress with respect to the reduction of operational and systemic risk. Providing clients with access to clearinghouses for CDS transactions is a very important step in this evolution and we are happy to have worked closely with the SZCOX, the dealer community and buy side firms to make this happen.

SZCOX's cleared-only CDS initiative, which was jointly developed with its founding members, offers both buy-side and dealer market participants the ability to clear CDS. SZCOX's clearing solution provides participants with an open-access clearing solution for over-the counter credit default swaps, is based upon cleared CDS products that will mirror OTC market conventions and practices and incorporates the proven benefits of SZCOX's clearing model.

Shenzhen Commodity Exchange offers one of the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. SZCOX brings buyers and sellers together through its SZCOX G-Trader™, electronic trading platform and its trading facilities in Shenzhen.