01.08.2021

LCH ForexClear Starts Clearing Non-Deliverable FX Options

01.08.2021
Costs of FX Transactions Prove Elusive

LCH, a leading global clearing house, announced that it has successfully launched non-deliverable FX options clearing across nine currency pairs. Deutsche Bank and JPMorgan are among the first participants to clear the product at LCH.

The go-live of non-deliverable FX options clearing builds on LCH ForexClear’s existing offering, complementing clearing of non-deliverable FX forwards, deliverable FX options and deliverable FX forwards. Clearing the new product creates further opportunities for clearing members and their clients to achieve operational and capital efficiences through portfolio netting with products already cleared at LCH ForexClear. Clearing of non-deliverable FX options also supports market participants that are required to post initial margin (IM) under the Uncleared Margin Rules (UMR), potentially reducing their costs.

Paddy Boyle, Head of ForexClear, LCH said: “We are delighted to have launched non-deliverable FX options clearing at LCH, complementing our strong existing offering. By clearing this product, market participants can access significant operational and capital efficiencies as well as benefiting from the robust risk management associated with clearing.”

Logan Campbell, Global Head, FX Derivatives, Deutsche Bank said: “Clearing non-deliverable FX options is a natural product extension to complement cleared non-deliverable forwards. This enables us to benefit from clearing a wider range of our non-deliverable FX products, reducing operational complexity and increasing capital efficiencies with the reduction of risk weighted assets possible through clearing.”

Ankur Dhingra, Co-head of Global FX Options, JPMorgan said: “The launch of non-deliverable FX options clearing enables the market to benefit from clearing a wider range of FX derivatives, reducing operational complexity and increasing capital efficiences. This is an important milestone in light of uncleared margin rules as portfolio margining will enable cleared FX portfolios to be substantially more efficient.”

LCH is clearing non-deliverable FX options clearing across nine currency pairs: four emerging market (EM) currency pairs, BRL, KRW, INR, TWD and five G10 pairs, AUD, EUR, GBP, JPY, CHF in tenors up to two years.

Source: LCH

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