LCH Adds FX Forwards To Clearing
- FX forwards now available for clearing at LCH; first CCP to clear the product
- Utilises settlement model developed in collaboration with CLS
- ForexClear expansion builds on existing clearing service for FX non-deliverable forwards and deliverable options
LCH, a leading global clearing house, today announced that it has expanded its deliverable FX offering to include FX forwards. Members of the ForexClear service are now able to clear this product in eight currency pairs.
— LCH (@LCH_Clearing) October 16, 2019
The product extension builds on the launch of deliverable FX options clearing in 2018, in line with customer demand. The addition of FX Forwards to the deliverable clearing service at LCH represents a significant expansion of the universe of FX derivatives now available for clearing. The product incorporates the first physical FX settlement service for cleared FX products, which LCH developed in collaboration with CLS.
Paddy Boyle, Head of ForexClear, LCH, said: “Making FX Forwards available for clearing is a significant moment for the market. This initiative substantially broadens the proportion of the FX market which is able to be cleared. As a result, we’re pleased to be bringing the risk management and efficiency benefits of clearing to an even larger segment of the market.”
Tom Prickett, co-head of EMEA Rates, J.P. Morgan: “The launch of cleared FX Forwards unlocks more opportunities for improved risk management and operational efficiencies. It’s always beneficial for the dealer community to have choice and today’s announcement is an exciting step for the advancement of the FX forward market.”
LCH is clearing FX Forwards on eight currency pairs: AUDUSD, EURUSD, GBPUSD, USDJPY, USDCHF, EURJPY, EURCHF, EURGBP with physical delivery. This is in addition to its existing deliverable options clearing service. ForexClear plans to add further FX products to its service in line with demand, and subject to regulatory approval.
Centrally cleared and settled transactions have been in continuously increasing demand.
LCH SwapAgent registered over 10,000 trades in 2021, a five fold increase.
Overall trading volumes across all products fell 8% from 2020.
Klimpel won Excellence in Human Clearing at Markets Media Group’s 2021 Women in Finance (U.S.) Awards.
Expansion to buy side increases multilateral netting opportunities for members.