RBC is making strategic moves to bolster its credit trading business, including key hires and entry into LCH's CDSClear, a response to the growing credit derivatives market fueled by artificial intelligence spending and the private credit market. The bank is positioning itself to capitalize on an institutional credit surge, evidenced by a 20% increase in US systemic dealers' credit derivative notional amounts in Q3 2025 and a more than 50% rise in index credit derivative notional in 2025.
Jackson Graham is joining RBC in June as the head of single-name CDS trading, bringing experience from Squarepoint Capital and Morgan Stanley. Furthermore, Goldman Sachs' Noel Reyes will join RBC Capital Markets in May to lead product development for electronic trading and execution algorithms. This demonstrates RBC's bet on algorithmic flows and its commitment to building internal capabilities for sophisticated, low-latency trading solutions.
The broader market context includes record corporate bond trading, with an average of $50 billion in investment-grade and high-yield bonds changing hands daily last year, up from $46 billion in 2024. The AI debt spree is also driving a "derivatives bonanza," as big tech companies raise hundreds of billions for AI, leading Wall Street banks to trade more credit derivatives. Credit derivatives tied to single companies, which barely existed for high-grade Big Tech issuers a year ago, are now among the most actively traded US contracts outside the financial sector.
Worries among debt investors about tech companies over-leveraging for AI are breathing new life into the credit derivatives market, allowing banks and investors to protect against defaults. RBC's dual strategy of hiring for advanced execution and securing operational infrastructure like clearing access through CDSClear is designed to meet this institutional demand, which sees 83% of investors aware of credit futures but only a small fraction actively trading them, indicating a large untapped opportunity. Royal Bank of Canada (RBC) is the first Canadian clearing member on LCH's CDSClear, gaining margin and operational efficiencies and global connectivity to serve rising CDS trading volumes.
