€100+ trillion of bonds and repos cleared to end September - fixed income volumes up 30%+ year on year 

London, 07 October 2010

LCH.Clearnet group has cleared bond and repo trades with a notional value of €101 trillion in the first nine months of the year, an increase of 31% on the same period last year. Notional volumes in September were up 21% on 2009.  This growth has been driven by an increase in demand for both the Euro and Sterling clearing services.

On 9 August LCH.Clearnet Ltd began clearing Spanish government bonds and repos.  In the 8 weeks since launch, the service has attracted 45 participants and cleared Spanish government debt with a notional value of €256 billion.  September was a particularly strong month with €151billion of notional cleared, representing some €3.6 trillion term adjusted volumes.

John Burke, director and head of fixed income, LCH.Clearnet said; “The strong growth in fixed income volumes indicates the continued interest in clearing for European government bond and repo markets.  In the current market conditions the benefits of clearing, such as reduced counterparty risk and anonymity when trading, as well as the significant efficiencies that balance sheet netting brings are extremely attractive.”

LCH.Clearnet group is the largest clearer of bonds and repos in Europe, providing services across 13 government markets.  The group clears over 80%* of the cleared European government bond repo market. 

*Estimate based on LCH.Clearnet analysis

To view the press release as a pdf click here.

-ends-

About LCH.Clearnet

LCH.Clearnet is the leading independent clearing house group, the world’s largest clearer of OTC derivatives and in addition serves major international exchanges and platforms.  It clears a broad range of asset classes including: securities, exchange traded derivatives, commodities, energy, freight, interest rate swaps, credit default 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.

A clearing house sits in the middle of a trade, assuming the counterparty risk involved when two parties (or members) trade.  When the trade is registered with a clearing house, it becomes the legal counterparty to the trade, ensuring the financial performance; 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 the market.

Initial and variation margin (or collateral) is collected from clearing members; should they fail, this margin is used to fulfill their obligations.  The amount of margin is decided by the clearing house’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.