LCH.Clearnet expands RepoClear

London, 11 May 2009

LCH.Clearnet’s RepoClear facility has launched country specific government bond collateral baskets for seven Eurozone countries. French, Italian, Spanish, Dutch, Belgian, and Greek baskets are launched today, following the successful launch of the German €GC basket on 27 April.

LCH.Clearnet clears €10 trillion notional in interbank repo trades a month.  The RepoClear service facilitates interbank liquidity by mitigating counterparty risk, increasing trading through anonymity and reducing settlement costs. 

The country specific collateral baskets enable banks to use country specific assets as end of day collateral with LCH.Clearnet.  RepoClear’s automated and efficient processes minimise cost and execution risk, further facilitating interbank lending and enabling banks to maximise the utilisation of their government bond inventory.

John Burke, Director, LCH.Clearnet said; “Throughout the recent market turmoil RepoClear has demonstrated the valuable role clearing can play in OTC repo markets.  This latest innovation demonstrates our commitment to expanding and developing RepoClear.”

Thomas Hansen, Director, Credit Suisse said; “The introduction of €GC country baskets is a welcome development for the market.  It provides banks with a useful mechanism to support their Euro trading and collateral management needs.”

To view the press release as a pdf click here.  

About LCH.Clearnet

LCH.Clearnet is the leading independent clearing house in Europe, 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, energy, freight, interbank interest rate swaps 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.

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

Initial and variation margin (or collateral) is collected from LCH.Clearnet members; should they fail, this margin is used to fulfill their obligations.  The amount of margin is decided by LCH.Clearnet’s highly experienced risk management teams, who 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.