01.19.2022

LCH Achieves Record Clearing Volumes

01.19.2022
  • LCH services continued to support transition to risk-free rates with conversion of over $35 trillion of notional
  • LCH SwapAgent registered over 10,000 trades in 2021, a five fold increase
  • ForexClear and FXall partnership expanded FX traders’ workflows for OTC trades
  • Record clearing volumes reported across LCH services

LCH, part of LSEG (London Stock Exchange Group) tannounced record clearing volumes for 2021, having expanded its services and built new connectivity. Following LSEG’s acquisition of Refinitiv, ForexClear partnered with FXall, to streamline FX traders’ access to clearing for FX OTC trades. LCH also reinforced its commitment to Asia by including Singapore dollar denominated cash and government securities as accepted collateral and extended SwapClear’s operating hours to better serve the region.

Daniel Maguire, Group Head, Post Trade, LSEG and CEO, LCH Group, said: “Throughout 2021, LCH continued to provide the robust risk management, capital efficiencies and operational benefits that support our customers and help ensure financial stability. Our customer centric approach helped drive strong growth across our services.

“I’m particularly pleased by the growth at SwapAgent as LCH expands its offering to support customers in the non-cleared space.  We also enabled a seamless transition to risk-free rates across five major currencies, effectively closing the door on non-USD LIBOR for cleared OTC swaps.”

Supporting the transition to risk-free rates (RFRs), SwapClear, LCH’s interest rates derivatives clearing service, converted over 350,000 legacy IBOR-linked contracts, representing a notional equivalent of over $35 trillion in the fourth quarter of 2022. Over the full year, SwapClear registered 6.8 million trades, up 7% from 2020 and its highest on record. Clearing of inflation swaps also reached record highs with $9 trillion of notional cleared across 322,639 trades, 37% and 39% increases on 2020, respectively.

SwapAgent saw a 489% year-on-year increase with 10,186 trades processed, a record for the service. In parallel with SwapClear, SwapAgent worked with market participants to facilitate the industry’s transition to risk-free rates in bilateral OTC derivatives helping to support financial stability. Following the go-live of the RFR First initiative, 100% of USD/GBP swaps processed at SwapAgent were SOFR versus SONIA, 100% of USD/CHF swaps processed were SOFR versus SARON and 94% percent USD/EUR swaps processed were SOFR versus €STR.

RepoClear processed a record €195 trillion of nominal across 9.4 million trades during 2021 in LCH SA, representing increases of 15% and 29% respectively, compared to 2020. At LCH Ltd, RepoClear also saw year-on-year increases of 17% and 28% with €42.6 trillion in nominal cleared across 1.1 million trades, respectively.  Across Ltd and SA, RepoClear processed €237.6 trillion of nominal across 10.5 million trades, both representing records for the service. In December, RepoClear at LCH SA went live with Sponsored Clearing, expanding access to the Paris-based service for the buy-side.

Delivering upon synergies from LSEG’s acquisition of Refinitiv, ForexClear partnered with FXall, to allow FXall users to streamline and accelerate their access to clearing of FX OTC trades. This new solution provides FXall Settlement Center users a faster way of clearing NDF trades through LCH’s ForexClear service, while also providing access to its risk management and efficiency benefits. Other achievements during 2021 included a record $21.7 trillion in notional cleared across the service, up 14% from 2020. Of that, $243 billion was cleared by clients, a 45% increase over the previous year. At the beginning of 2021, ForexClear expanded its offering with the go-live of non-deliverable FX options.

CDSClear saw 133% growth in iTraxx Options cleared at the service compared to 2020, with a record €163 billion of notional cleared in 2021. In European Single Names CDS, the service processed a record €210 billion, an increase of 40% on 2020. CDSClear also processed a record $42.5 billion of notional of US Indices CDS, an increase of 28% on 2020. Reinforcing its commitment to the US, CDSClear gained approval from the SEC to clear Single Names CDS and recieved authorisation from the CFTC to portfolio margin Index and Single Name CDS.

Setting a new annual record, EquityClear in LCH Ltd registered 1.9 billion trades, a 5% increase from 2020. During the year, EquityClear SA connected to additional central securities depositories (CSDs) in Italy and Austria. LCH SA’s commodity derivatives service, CommodityClear, also set an all-time annual record with 42 million contracts cleared representing a 23% increase on 2020’s 34 million.

Source: LCH

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