State Street Global Markets will close its U.S. derivatives clearing business early next year and has halted plans to launch a similar business in Europe.
“Due to market and regulatory factors, our clients have largely evolved their investment strategies toward the use of futures and away from the use of over-the-counter derivatives,” said Anne McNally, State Street spokeswoman.
The closing of the U.S. operation is subject to client contractual commitments, Ms. McNally added.
State Street becomes the second firm to close down its derivatives clearing operations in just over a year. Bank of New York Mellon closed its U.S. operations in December 2013 and announced in October it was closing its European unit, citing regulatory reasons for both.
U.S. and European regulators are seeking to have clearinghouses guarantee swaps. Also, Commodity Futures Trading Commissioner Mark P. Wetjen suggested in a prepared speech Thursday to the Futures Industry Association in Singapore that the CFTC should consider requiring standardized stress tests for clearinghouses to improve transparency.
