Barclays is the latest in a string of dealers to lose key swaps clearing personnel after head of over-the-counter client clearingRay Kahn left the bank, a spokesperson has confirmed.
Barclays reiterated its ongoing commitment to the client clearing business, but the spokesperson declined to comment on whether a new appointment would be made. The global clearing business continues to be run by Alasdair Hodge, who is based in London.
Kahn’s departure comes after Morgan Stanley lost its OTC client clearing head Andrew Ross, who left to run the LSE’s CurveGlobal derivatives platform earlier this year.
JP Morgan also recently lost its global agency clearing and collateral management head Emily Portney. After first joining Visa, Portney was recently appointed as CFO for Barclays’ corporate and international business, which includes its investment bank.
Kahn, who joined Barclays in 2008 from Lehman Brothers, spearheaded the UK dealer’s effort to position itself as a leading clearing operation for its swaps clients after global regulators forced vanilla derivatives to be cleared through central counterparties.
Back-pedalling
The bank took an early lead over its competitors, capturing up to 70% market share at its peak. But costly capital and leverage requirements associated with client margin posted against cleared swaps forced the bank to back-pedal on its lofty ambitions and raise pricing.
Last year, Barclays outsourced a range of its clearing services into an industry utility operated by SunGard – now part of FIS. As part of the agreement, the bank began a three-year migration of up to 300 of its employees into the utility.
Earlier this year, Credit Suisse signed an agreement to outsource its post-trade derivatives operations and technology to the third-party operator in an attempt to cut costs.
Barclays held US$4.9trn of segregated client margin backing OTC swaps positions at the end of May, according to CFTC data, compared to more than US$6bn at the end of 2014.
Client swaps clearing is now dominated by Morgan Stanley and Credit Suisse, each with over US$10bn of segregated client swaps margin, followed closely by Citigroup and JP Morgan. Barclays was recently pushed into seventh place after being leapfrogged by Bank of America Merrill Lynch and Wells Fargo.
Others have also been forced to rethink their operations. For BNY Mellon, Nomura, RBS and State Street, that has meant a complete exit from the OTC client clearing business.
The number of futures commission merchants registered with the CFTC has fallen from more than 100 to under 70 in the last two years.