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LCH.Clearnet’s ForexClear breaks $50 bn notional cleared

- Client clearing service now built and fully tested -

London, 17 July 2012

LCH.Clearnet Limited’s (LCH.Clearnet) ForexClear service has exceeded $50 billion in cleared notional of FX NDFs since launching only four months ago on 19 March 2012.

With 14 members clearing across six currencies, the service has seen a marked acceleration in daily volumes in the last month as FX market participants have become accustomed to the processes around clearing.  Market volatility in many currencies cleared has added to this, demonstrating the benefit that counterparty risk mitigation and daily exchange of mark-to-market can bring.

Utilising the unique OTC clearing experience of other LCH.Clearnet services, Swapclear and CDSClear, ForexClear delivers a robust risk management approach, combined with fully automated, scalable STP service.

Gavin Wells, CEO, ForexClear said: “I am delighted that our members have realised the benefits of clearing so soon after launch.  With over 4,000 tickets novated, and with so many members having proven the service, we are now preparing to extend FX NDF clearing to clients.  With the additional five currencies being added to the service in the coming weeks, we will provide 95% market coverage and look forward to bringing the benefits of clearing to the entire market.”

The first global clearing service for foreign exchange, ForexClear will shortly launch a client clearing solution to provide clients with robust protection and benefits such as segregation of margin and collateral and portability of client positions. The client offering is subject to regulatory approvals.

ForexClear clears NDFs in six of the most actively traded currencies, Brazilian Real, Chilean Peso, Chinese Yuan, Indian Rupee, Korean Won, Russian Ruble, and will extend these to include Colombian Peso, Indonesian Rupiah, Malaysian Ringgit, Philippine Peso & Taiwan Dollar in the coming weeks.

Please click here to view the press release as a pdf

About LCH.Clearnet

The LCH.Clearnet Group is the leading independent clearing house group, serving major international exchanges and platforms as well as a range of OTC markets. It clears a broad range of asset classes, including securities, exchange-traded derivatives, commodities, energy, freight, foreign exchange derivatives, interest rate swaps, CDS and euro- and sterling-denominated bonds and repos, and works closely with market participants and exchanges to identify and develop clearing services for new asset classes.

A clearing house sits in the middle of a trade, assuming the counterparty risk involved when two parties (or members) trade. When a trade is registered with a clearing house, that clearing house becomes the legal counterparty to the trade, ensuring financial performance of the trading parties; if one of the parties fails, the clearing house steps in. By assuming the counterparty risk, the clearing house underpins many important financial markets, facilitating trading and increasing confidence within these markets.

Initial and variation margin (or collateral) is collected from clearing members; should they fail, this margin is used to fulfil their obligations. The amount of margin is decided by the clearing house’s highly experienced risk management teams, which assess a member’s positions and market risk on a daily basis. Both the soundness of the risk management approach and the resilience of its systems have been proven in recent times. LCH.Clearnet is regulated or overseen by the national securities regulator and/or central bank in each jurisdiction from which it operates.

LCH.Clearnet Limited is a wholly-owned subsidiary of LCH.Clearnet Group Limited