Dec. 23--A European partnership Monday became the first group to officially start bringing over-the-counter credit default swaps worth trillions of dollars onto an exchange platform.

Liffe, a London-based futures exchange owned by NYSE Euronext, and LCH.Clearnet Ltd., a clearinghouse in London, began clearing these forms of insurance against bonds defaulting.

The IntercontinentalExchange in Atlanta and a joint Chicago-based effort by the CME Group and Citadel Investment Group are seeking approval to do the same thing in the U.S.

American regulators have set a Dec. 31 deadline for beginning to approve clearinghouses for credit default swaps. And U.S. Rep. Collin Peterson (D-Minn.) plans to introduce legislation next year requiring credit default swaps to be centrally cleared.

By having a clearinghouse act as the centralized counterparty for each trade, there should be less risk that the bankruptcy of a major financial firm would spread to its trading partners and damage the entire global economy.

Using Liffe's existing Bclear service, the European partnership will offer clearing on three indexes for credit default swaps tracked by Markit, a financial information services company.

"This is an important step toward allaying growing regulatory and investor concerns over the integrity of the CDS market," LCH.Clearnet CEO Roger Liddell said in a statement.

jboak@tribune.com

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