Following Dodd-Frank: Goldman, BlackRock Complete Swaps Deal
July 1, 2011
Goldman Sachs Group, one of the world’s largest derivatives trading shops, and $3.65 trillion asset manager BlackRock Inc. said they have completed a credit derivative trade from the time of execution to settlement following new regulatory policies.
The transaction marks Goldman’s first swap trade with a client to be electronically executed and centrally cleared as envisioned in the Dodd-Frank Wall Street Reform Act.
The trade, referencing the CDX North America Investment-Grade Index administered by data firm Markit, was executed on a trading platform run by Tradeweb. The transaction was cleared through Chicago's CME Group.
Goldman served as the clearing agent, routing the trade through to the CME’s clearinghouse for processing on its client's behalf. It also served as the executing dealer on the trade. Goldman officials declined to comment on the size of the trade or other characteristics of the deal.
Deutsche Bank, JP Morgan and Barclays Capital have made similar announcements in recent months.
Under the Dodd-Frank financial reform legislation standardized swap contracts must be traded on registered exchanges or other electronic platforms called “swap execution facilities.” The majority of swaps will also have to be cleared through a central clearinghouse. Tradeweb is considered one of the leading contenders to win regulatory status as a "swap execution facility."