Contact:

John Burke- Director, Fixed Income
+44 (0)20 7426 7171

LCH.Clearnet Announces Record Volumes for RepoClear Sterling GC

London, 03 October 2007

LCH.Clearnet is pleased to announce that its innovative new RepoClear Sterling GC product hit a number of new trading records in September. The most notable of these was the outstanding balance in the product increasing during the month to a record high of £44 billion (€64 billion). 

RepoClear Sterling GC, which was launched by LCH.Clearnet Ltd in March 2007, offers Sterling money market participants the opportunity to trade Sterling on a secured basis against a basket of UK government bond collateral.

John Burke, Director of LCH.Clearnet’s Fixed Income business, said “The increase in the outstanding balance for the RepoClear Sterling GC product to £44 billion is very encouraging and we believe that the product, which was designed in conjunction with the Sterling repo market community, provides an important mechanism for banks to manage their Sterling exposures. The increased activity in the RepoClear Sterling GC product bodes well for the future success of the equivalent Euro-denominated product (‘RepoClear EuroGC’) that is currently being built and is expected to go live in the second quarter of 2008”.    

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Note to Editors

RepoClear Sterling GC key features

RepoClear Sterling GC is a repo product that uses UK government bonds as collateral against the receipt or delivery of an equivalent amount of sterling cash. Unlike regular Gilt repo where the emphasis is on specific bonds e.g. to cover a short position, Sterling GC trades are cash-led. Traders are only focused on the allocation or receipt of any Gilt(s) from a predefined list of eligible Gilts to satisfy a repo settlement obligation. Bonds that are not highly sought after in the market by borrowers and are therefore used as collateral against cash loans in this way are known as General Collateral (‘GC’). When grouped for trading purposes, the bonds with broadly equivalent characteristics are then viewed as compromising a basket of bonds - a GC basket.

In addition to the standard risk management benefits of a central counterparty, the RepoClear Sterling GC product highlights the following key features:

• Trading of a standardised basket – resulting in concentrated trading liquidity

• Term trades characterised as a series of linked one-day settlements such that all open trades expressed in the basket can net against each other, each day, irrespective of term – resulting in an optimal settlement netting environment

• Settlement achieved through the use of Crest’s DBV settlement mechanism – resulting in an optimal collateral management environment
  

About LCH.Clearnet

LCH.Clearnet is currently owned 67.6% by users, 17.8% by exchanges with the balance of 14.6% being held by Euroclear. Upon completion of the Euronext share buy-back programme by 2009, the Group will be owned 73.3% by users, 10.9% by exchanges and 15.8% by Euroclear.

LCH.Clearnet is committed to operating under strict principles of non-discrimination across its user base. LCH.Clearnet serves major international exchanges and platforms, equity, exchange-traded derivatives, energy, interbank interest rate swaps markets and the majority of the Euro-denominated and sterling bond and repo markets.