Fixed Income volumes increase by 28% yoy 

Growth fuelled by increased demand: 19 new participants sign up 

London, 12 January 2011

The nominal value of European government bond and repo trades cleared by the LCH.Clearnet group (LCH.Clearnet) in 2010 increased by 28% year on year, a record fuelled by increased demand as banks seek to manage their counterparty risk exposures.  19 new participants signed up to clear their fixed income business through LCH.Clearnet, taking the total to 70 and resulting in an increased proportion of inter-bank repo trades being cleared.

The total nominal value of fixed income trades cleared by LCH.Clearnet during 2010 reached €137 trillion, equating to over €500 billion in nominal value cleared daily. 

Also in 2010, LCH.Clearnet launched the first clearing service for Spanish government bonds and repos. A notional value close to €700 billion was cleared during the year.  

John Burke, director and head of fixed income, LCH.Clearnet said; “At times of market stress, clearing becomes increasingly important. These impressive volumes show that maintaining liquidity and managing collateral are top of the list of priorities for banks. We look forward to continuing to develop and enhance our fixed income business during 2011.”

For 12 years, LCH.Clearnet has worked closely with its members to develop innovative clearing solutions for the fixed income markets, generating significant efficiencies in the management of collateral in the euro and sterling repo markets. Europe’s largest clearer of bonds and repos, LCH.Clearnet provides services across 13 government markets. 

To view the press release as a pdf click here.

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About LCH.Clearnet

LCH.Clearnet 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, interbank 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.