LCH Delivers Record Clearing Volumes In 2019
- Innovations include launch of FX forwards clearing, €STR swaps, consolidation of Euro-debt activity at LCH SA and increased venue connectivity at EquityClear
- Over $1.2 quadrillion cleared at SwapClear, with $920 trillion compressed
- Record volumes also reported by CDSClear, ForexClear and RepoClear
LCH, a leading global clearing house, today announced that 2019 was another record year for volumes across multiple asset classes. Activity in its OTC derivatives and fixed income clearing services as well as its SwapAgent franchise exceeded 2018’s volumes. Growth has been driven by increased flow from new and existing customers looking to access the efficiencies of clearing.
Daniel Maguire, CEO, LCH, and Group Director, Post Trade, London Stock Exchange Group, said: “2019 has been another successful year for LCH with record levels of activity across many of our services. We’ve continued to collaborate with the market to launch efficient and resilient solutions to support our customers’ risk management and capital efficiency. As we move into 2020, LCH, and the LSEG Post Trade division as a whole, is looking forward to continuing to partner with the market to foster further innovation and enable compliance with regulatory reforms, including the migration to alternative reference rates.”
In 2019, SwapClear, LCH’s interest rate derivatives clearing service, registered over $1,229 trillion in notional, an increase of 14% from 2018’s volumes. Compression volumes also continued to grow, with more than $920 trillion compressed over the course of the year, up 19% from 2018. During the year, LCH was the first CCP to launch clearing for €STR swaps and expanded its non-deliverable swaps offering to cover five additional currencies.
LCH SwapAgent’s non-cleared derivatives service saw growth in cross-currency swaps offering, with $726 billion processed during 2019. SwapAgent now has 16 members live and actively using the service.
ForexClear, LCH’s FX derivatives clearing service has continued to increase its product offering and volumes in 2019, with over $18 trillion in notional cleared during 2019, up 5%. Of this $60.5 bn was client cleared notional, with volumes having increased by 6 times from 2018. In October 2019, deliverable FX Forwards became the latest products to be cleared at ForexClear, with cleared deliverable notional accounting for $456.47 bn in 2019, a near 13-fold increase from 2018. Compression volumes gathered momentum with $48 billion in notional compressed over the year, over 10 times the amount for 2018. Cleared FX volumes are anticipated to further increase this year, aided by phase 5 of the uncleared margin rules.
CDSClear also continued its growth trajectory, with €1.5 trillion of notional cleared in 2019 across index and single names, an increase of 23% from 2018. This includes €42.9 billion of notional cleared by clients, an increase of 51% year-on-year, with several hundred client accounts having onboarded in 2019.
RepoClear reported a record year for nominal cleared in 2019, with €212 trillion cleared at LCH during the year, an increase of 7% from 2018. In Q1 2019, LCH’s members consolidated their Euro-denominated repo clearing activity at LCH SA, enabling them to benefit from the netting efficiencies of T2S.
EquityClear cleared 1.4 billion trade sides across LCH Ltd and SA during 2019. This included trades from newly connected European trading venues from Aquis, Cboe and Turquoise. At LCH SA, 2019 saw the introduction of clearing for all Euronext ISINs traded on Turquoise. LCH SA’s listed derivatives franchise continued to see growth in Single Stock Futures and Single Stock Dividend futures, with 9 million single stock futures cleared in 2019, three times the volume of 2018’s activity.
The addition unlocks potential opportunities for increased margin efficiencies at SwapClear.
The industry group for exchanges and CCPs said it is hard to envisage any benefit from closing markets.
All exchanges, clearing houses and business operation are operating normally.
The clearer's ability to operate remotely is regularly tested.
Japanese financial institutions can directly access Eurex for swap clearing.