IntercontinentalExchange, Inc. today announced that it is acquiring The Clearing Corp. as part of an initiative to develop a global clearing solution for the credit default swap (CDS) market.

Under the terms of the agreement, ICE will acquire TCC and will form ICE US Trust, a New York limited purpose trust company and subsidiary of ICE, and will continue to work closely with regulators, other market participants and industry groups to develop a comprehensive central counterparty clearing solution for the CDS market. This customized solution is currently undergoing final testing in preparation for launch, they say.

The merger comes with the support of nine of the major global investment banks who are dealers in the CDS markets who have entered into memorandums of understanding to develop a joint global clearing solution and to effect the acquisition. The firms supporting the deal are Bank of America, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Merrill Lynch, Morgan Stanley and UBS.

“ICE has been a long-time believer in the value that clearing brings to market participants, and we’ve demonstrated that belief by creating innovative clearing and risk management solutions in both the futures and the over-the-counter markets,” said ICE chairman and CEO Jeffrey Sprecher. “We have made a commitment to developing a market structure that reduces risk and increases transparency and capital efficiency in these important global markets, first through our acquisition of Creditex, and now through our planned acquisition of The Clearing Corporation. Both of these organizations have demonstrated strong dedication to the CDS community.”

The boards of directors of ICE and TCC have approved the MOUs, specific terms of which have not been disclosed at this time. The transaction is subject to the receipt of required government approvals. The parties will work toward receiving the necessary governmental approvals while working to execute definitive documents during the fourth quarter, by which time they expect to begin clearing CDS transactions through ICE Trust.