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Bank of America Starts Derivatives Group

Bank of America is the latest to launch a clearing services business.
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Bank of America

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has become the latest bank to place its bet on over the counter derivatives clearing as a source of new revenue.

The Charlotte-based bank announced today that has created the Global Futures and Derivatives Clearing Services (GFDCS) group, which will provide agent-clearing services for derivative instruments such as interest rate, currencies, credit, equities and commodities, according to a press statement.

Bank of America had made no secret about its plan to launch such a business. Indeed, Bob Burke named today as GFDS co-head with Gonzalo Chocano, told


more than two months ago that he

expects all major swaps dealers to follow suit


Goldman Sachs

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announced the launch of its business in July, and executives at close to several other banks, including


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Deutsche Bank

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JPMorgan Chase

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claim they have had a similar offering for a year of more in some cases, but have not bothered to make an official announcement.

The banks will not be clearinghouses themselves. Instead, they will use their status as clearing members to help clients clear trades through clearing houses, such as

LCH. Clearnet

for interest rate swaps, or

ICE Trust

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, a unit of the

Intercontinental Exchange

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, for credit default swaps.

The Bank of America initiative will become part of the same group that runs Bank of America Merrill's prime brokerage unit, titled Global Markets Financing and Futures. Burke and Chocano will report to Denis Manelski and Syl Chackman, co-heads of that business.

A statement from Bank of America said that the bank anticipates "substantial growth in OTC derivatives clearing" from institutional investor and corporate clients. "Every client we serve will be impacted by the financial reforms transforming the OTC derivatives market," said Tom Montag, president of Global Banking and Markets.


Written by Dan Freed in New York


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