ForexClear Compresses $4.5bn Of NDF Notional
- Citi and Standard Chartered Bank among first clearing members to actively use ForexClear’s compression service
- Compression enables members and their clients to improve capital and operational efficiency by reducing notional outstanding
LCH, a leading global clearing house, today announced that ForexClear members have reduced their notional outstanding by $4.5 billion through the use of the service’s compression solution. Citi and Standard Chartered Bank are among the first participants to actively compress their trades at ForexClear.
Compression is the process by which clearing members and their clients can eliminate offsetting trades to reduce notional outstanding and the number of line items in a portfolio. Capital requirements such as those introduced under the Basel III leverage ratio have incentivised banks to reduce notional outstanding.
Tamaryn Nuttall, Head of ForexClear Product, LCH, said: “Growth in FX clearing volumes has led to demand for solutions that drive down notional outstanding and contribute to greater capital and operational efficiency. Compressing $4.5 billion in cleared NDF notional is a significant milestone for LCH. We expect uptake of compression services to accelerate significantly over the coming year as clearing volumes continue to grow and as we expand our compression offering.”
Matt Turner, Director FM Balance Sheet Management, Standard Chartered Bank, said: “Having seen the benefits of compression in our rates business, we’re delighted to be an early adopter of compression at ForexClear. It’s an effective way to reduce our notional outstanding and improve operational efficiency.”
ForexClear’s compression offering covers both standard and blended rate solo compression.
UK CCPs may be equivalent for 12 months in the event of a no-deal Brexit.
The clearing capability will be for listed derivatives and OTC products.
Pension funds should be able to post securities as variation margin to CCPs.
The service will be available for shares, equity certificates and ETFs.
Eurex is building an EU27 solution for clearing OTC IRS products after Brexit.