Shearman & Sterling has advised ICE Clear Europe on the setting up of its credit default swap (CDS) clearing service, one of the first European CDS clearing houses, which launched yesterday.
The team negotiated and drafted an amended rulebook and membership documentation with the main banks that deal in credit default swaps including Barclays, Bank of America, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley and UBS.
Working closely with ICE Clear Europe, the Shearman & Sterling lawyers in London, Frankfurt, New York, and Washington DC prepared the new legal framework, through which the CDS clearing operations will work, and obtained approval from the Financial Services Authority. The team also received SEC exemption thus allowing ICE Clear Europe to operate as a central counterparty for clearing CDS.
The team was led by partners Barney Reynolds and Patrick Clancy with lead associate Thomas Donegan. Barney Reynolds said, “There has been strong political and regulatory pressure for a CDS clearing service to be set up to mitigate the risks in the CDS market. We are very pleased to have helped ICE Clear Europe to overcome competitive challenges to deliver this European-based CDS clearing house ahead of the European Commission’s deadline of 31 July”.
The Shearman & Sterling team also included partners Ian Harvey-Samuel and Mei Lian and associate Aatif Ahmad. In the US, a team including partners Abigail Arms, Geoff Goldman and Bradley Sabel, counsel Russell Sacks and associates Michael Blankenship, Steven Blau and Christian Gloger successfully obtained a required Securities and Exchange Commission exemption for ICE Clear Europe and advised on other US issues. Tax advice was provided by partners Iain Scoon and Michael Shulman and associates Patrick Valenti and Will Smith. Intellectual property aspects of the deal were dealt with by counsel Deborah Lincoln and associate Gloria Jung. Corporate law advice was given by partners Peter Lyons and Lois Moore and associate David Connolly.
Shearman & Sterling advised ICE Trust on the setting up of a dedicated CDS clearing house in the US earlier this year. ICE Trust has cleared $1.6 trillion in North American CDS indexes to date.