LCH SwapAgent Processes First Trades
LCH SwapAgent, a service for the non-cleared derivatives market, announced that it has processed its first trades.
Citi and Deutsche Bank were the counterparties to the Swiss Franc-denominated interest rate swap and Euro-denominated inflation swap. The trades were processed through MarkitSERV.
LCH SwapAgent is available for market participants trading non-cleared OTC interest rate derivatives. Acting as an independent calculation agent, LCH SwapAgent calculates and enables customers to exchange bilateral margin and settlement payments, without the need for a central counterparty. By using LCH SwapAgent, customers can benefit from LCH’s experience in servicing the derivatives market as well as realising capital and operational efficiencies resulting from a simplified and standardised trade process.
Nathan Ondyak, Global Head of LCH SwapAgent, said: “We are pleased that LCH SwapAgent is now live. We have received significant support from the market for the new service and are delighted that Citi and Deutsche Bank have completed the first trades. Through LCH SwapAgent we can extend the efficiencies of centralised clearing to the non-cleared market and we look forward to expanding this offering to include products such as cross-currency swaps in due course.”
Stuart Bancroft, Managing Director, CVA trading, Citi, said: “As the non-cleared market for interest rate derivatives becomes increasingly complex, we welcome innovative solutions like LCH SwapAgent that help simplify the bilateral margining process, while enabling market participants to comply with the uncleared margin rules.”
14 dealers have confirmed their support for LCH SwapAgent including: Bank of America Merrill Lynch, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Nomura and RBS. LCH also plans to supply risk calculation data to the AcadiaSoft Hub to further streamline the margining process for the banks already using The Hub to comply with the non-cleared margin rules.
LCH SwapAgent’s members are able to benefit from services including CSA standardisation, end-to-end trade life cycle management, independent valuation and risk calculation, dispute elimination, payment netting and in due course compression. The service is due to expand to encompass cross-currency swaps from Q4 2017.
The association supports the CFTC’s effort to establish new clearing mandates.
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.