LCH.Clearnet SA set to clear for Galaxy^TM

Paris, 26 April 2011

LCH.Clearnet SA (LCH.Clearnet) will provide clearing services to Galaxy, the Multilateral Trading Facility (MTF) owned and operated by TradingScreen and certified by the Cassiopeia Committee for the provision of clearing services for euro-denominated bonds, from its launch in June 2011, subject to regulatory approval.

The Cassiopeia Committee is a Paris based organisation, formed in 2010, and focused on the euro-denominated corporate bond market.  It seeks to explore ways of introducing secondary corporate bond platforms in Europe and address market demands to improve transparency, liquidity, post-trade services and reporting.

LCH.Clearnet will deliver an automated and fully integrated solution from trading through clearing to settlement. The settlement instructions will be processed through the major International Central Securities Depositories (ICSDs) and European national Central Securities Depositories (CSDs), and the service’s use of existing connectivity will facilitate implementation and adoption by clients and enable them to clear a new asset class, using their current arrangements.

Commenting on the initiative, Christophe Hémon, Chief Executive of LCH.Clearnet SA, said: “We have worked closely with Galaxy to provide our expertise to the Cassiopeia initiative to enhance transparency and certainty in the euro-denominated bonds markets, in line with regulators’ aims to reduce systemic risk by bringing more OTC products into clearing. This offering complements LCH.Clearnet’s clearing arrangements with Cassiopeia MTFs for corporate bonds and further reduces risk in the euro-denominated bond markets.”

Jean-Philippe Malé, Chief Executive Officer of Galaxy, added: “As one of the leading financial technology provider to financial markets, we are delighted to bring our know how to this European initiative and to work with LCH.Clearnet SA to bring to our buy-side and sell-side clients the capability to centralise their clearing with a well established clearing house. By working together with LCH.Clearnet we will deliver a completely integrated, highly efficient workflow from low latency price distribution, electronic execution and position monitoring to risk free clearing and settlement straight through processing that is not currently available for OTC transactions.”

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To view the press release as a pdf click here.

About LCH.Clearnet

LCH.Clearnet (then The London Produce Clearing House Limited) began clearing commodity futures in 1888.  Today it 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, energy, freight, 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.

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, reducing risk, facilitating trading and increasing confidence within the market.

Initial and variation margin (both 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;  in IRS, six times intraday.  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.

About TradingScreen

TradingScreen is the leading independent provider of electronic trading solutions to the Buy Side. The company offers a suite of execution management and connectivity solutions encompassing all asset classes across global markets. TradingScreen’s goal is to simplify the complexity caused by market fragmentation and the proliferation of asset class and broker specific trading tools, by consolidating execution management of both exchange traded and OTC instruments on a single platform. TradingScreen brings the major global sell side participants and leading regional brokers to a common environment. The benefit to clients is an exceptional reach across counterparties, products, geography and services ranging from execution to algorithmic trading services, prime brokerage and clearing. This functionality is delivered through a proven and reliable ASP install- and-support model. TradingScreen provides global coverage from offices in New York, London, Tokyo, Chicago, Paris, Geneva, São Paulo, Hong Kong, Singapore and Sydney. For additional information, please visit www.tradingscreen.com.