By Ann Saphir
BOCA RATON, Fla., March 11 (Reuters) - Fannie Mae and Freddie Mac, the U.S. mortgage-funding giants, will this year begin running their portfolio of $3 trillion of interest rate swaps through centralized clearing, an official said on Thursday.
The Federal Housing Finance Agency, which regulates and has run the housing lending giants since they were seized by the government in September 2008, has been studying central clearing as a way of mitigating credit risk for the last 10 months, said Martha Tirinnanzi, chairman of the agency's clearinghouse working group.
'We are moving to central clearing,' Tirinnanzi said at the Futures Industry Association's annual meeting here. 'We expect to be there within months.'
Fannie Mae and Freddie Mac are among the largest swaps holders in the United States. About 75 percent of their combined portfolio of interest-rate swaps are eligible for clearing, she said.
The decision signals the government's commitment to pushing more over-the-counter derivatives -- bilateral agreements made away from regulated exchanges -- into central clearing, a goal of the Obama administration since the financial crisis helped deepen the worst recession since the 1930s.
Broader clearing of OTC derivatives is seen as mitigating systemic risk to the financial system.
The agencies has tested its portfolio with Nasdaq OMX Group Inc's majority-owned clearinghouse, she said.
CME Group Inc is also developing a system to clear such swaps. LCH.Clearnet, Europe's largest independent clearinghouse, dominates clearing of dealer-to-dealer contracts.
(Reporting by Ann Saphir; Editing by Leslie Adler) Keywords: FANNIE FREDDIE/CLEARING (ann.saphir@thomsonreuters.com; +1-312-408-8592; Reuters Messaging: ann.saphir.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BOCA RATON, Fla., March 11 (Reuters) - Fannie Mae and Freddie Mac, the U.S. mortgage-funding giants, will this year begin running their portfolio of $3 trillion of interest rate swaps through centralized clearing, an official said on Thursday.
The Federal Housing Finance Agency, which regulates and has run the housing lending giants since they were seized by the government in September 2008, has been studying central clearing as a way of mitigating credit risk for the last 10 months, said Martha Tirinnanzi, chairman of the agency's clearinghouse working group.
'We are moving to central clearing,' Tirinnanzi said at the Futures Industry Association's annual meeting here. 'We expect to be there within months.'
Fannie Mae and Freddie Mac are among the largest swaps holders in the United States. About 75 percent of their combined portfolio of interest-rate swaps are eligible for clearing, she said.
The decision signals the government's commitment to pushing more over-the-counter derivatives -- bilateral agreements made away from regulated exchanges -- into central clearing, a goal of the Obama administration since the financial crisis helped deepen the worst recession since the 1930s.
Broader clearing of OTC derivatives is seen as mitigating systemic risk to the financial system.
The agencies has tested its portfolio with Nasdaq OMX Group Inc's majority-owned clearinghouse, she said.
CME Group Inc is also developing a system to clear such swaps. LCH.Clearnet, Europe's largest independent clearinghouse, dominates clearing of dealer-to-dealer contracts.
(Reporting by Ann Saphir; Editing by Leslie Adler) Keywords: FANNIE FREDDIE/CLEARING (ann.saphir@thomsonreuters.com; +1-312-408-8592; Reuters Messaging: ann.saphir.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
