LCH Has Record Volumes In 2017
LCH, a leading global clearing house, today announced record volumes across multiple clearing services in 2017. LCH’s equities, fixed income, and OTC derivatives clearing services all surpassed previous years’ clearing activity. Volumes growth across the business has been driven by the roll-out of new products, effects of regulatory change and the onboarding of new customers across the world.
Daniel Maguire, Group CEO, LCH, said: “2017 has been another strong year for LCH across all our business areas. We’ve seen significant growth in volumes across multiple asset classes driven by new customers as well as additional flow from existing customers. The Group is committed to its Open Access approach, working in partnership with our customers to promote greater choice and innovation, reducing risk and maximising capital and operational efficiencies. In 2018, we look forward to continuing to partner with our customers, as we look to add additional products and services to our existing wide range spanning the cleared and increasingly the non-cleared market.”
During 2017, LCH’s interest rate derivatives clearing service, SwapClear, processed over $873 trillion in notional. Members and their clients increased their flows through LCH by 31%, compared with 2016. This volume increase was driven by significant onboarding of new clients across Europe, the Americas and Asia Pacific. For inflation swaps, over $3.1 trillion was cleared in 2017 across members and their clients, almost three-times the volume processed in the previous year. Compression volumes also continued to rise, with over $608 trillion compressed over the year, up 58% on levels from 2016.
LCH’s FX derivatives clearing service, ForexClear, delivered very strong growth in 2017, as members and their clients directed increasing emerging market NDF volumes into clearing to achieve greater efficiencies. In 12 months, ForexClear processed over $11 trillion in notional, up from approximately $3.2 trillion in 2016. The service also successfully launched clearing of G10 NDFs in Q4 2017
At RepoClear, the business reported the largest nominal amount cleared in the service’s history, with €175 trillion cleared across LCH Ltd and LCH SA, up almost 25% from 2016. This increase in activity follows the introduction of new markets to LCH SA and a new buy-side clearing model in LCH Ltd. LCH Ltd’s EquityClear service also had a strong year, with more than 1 billion trades processed in 2017, setting a new record.
CDSClear also achieved significant growth and increased its market share, with a record of €1.1 trillion in notional processed across its CDS index, and single names offering. LCH recently became the first CCP to clear credit index options, adding to its USD and EUR CDS product offering, which is the broadest of any clearing house.
In September 2017, LCH SwapAgent, a service for the non-cleared derivatives market, processed its first trades. 14 banks have confirmed their support for the service, which has also gone live with cross-currency basis swaps, and is planning to launch a swaptions offering in 2018.
In 2018, LCH will further expand its SwapClear product offering, with plans to introduce Non Deliverable Interest Rate Swaps in Chinese Yuan, Korean Won, and Indian Rupee, subject to regulatory approval. LCH is also planning to extend its portfolio margining solution, LCH Spider to allow Long Term Interest Rate Futures to be offset with eligible swaps. The clearing of FX Options at LCH is due to launch in 2018, subject to regulatory approval. RepoClear will extend clearing of more EU debt and start offering its sponsored clearing service in LCH SA.
Trade associations have asked for an extension of the temporary equivalence decision for UK CCPs.
Trading Technologies has partnered with Chinese clearing broker COFCO Futures.
Phase 5 of the uncleared margin rules (UMR) took effect from September 2021.
Temporary equivalence is set to expire on June 30 2022.
IRS trading volumes have fragmented without an equivalence agreement.