LCH.Clearnet named "clearing house of the year": Risk Awards 2011

London, 17 January 2010

LCH.Clearnet Group (LCH.Clearnet) has been named “clearing house of the year” by Risk Magazine, in recognition of its pivotal role in reducing systemic risk and for its development of market leading clearing solutions.

The annual Risk awards recognise best practice and innovation in the derivatives markets.  Judging criteria included risk management, client service, forward-thinking on regulatory issues and liquidity provision.

LCH.Clearnet was the first clearing house to offer client clearing for interest rate swaps through SwapClear, offering a unique level of security to clients in the case of a bank default. LCH.Clearnet was the first and only clearing house to clear interest rate swaps with maturities extending out to 50 years and offers clearing in a growing range of currencies.  In June 2010, following extensive industry consultation, LCH.Clearnet  began using the overnight index swap (OIS) rate curves to discount Euro and GBP trades in SwapClear, reflecting market practise and increasing certainty and transparency in the interest rate swap market.

In March 2010, with the support of French, Dutch, Belgian and Portuguese regulators, LCH.Clearnet launched the only Eurozone CDS clearing service in response to market demand.

LCH.Clearnet was the first to launch clearing for Spanish government bonds and repos in August 2010. A notional value close to €700 billion was cleared during the year. The recent European sovereign debt crisis highlighted the critical role that clearing plays; LCH.Clearnet’s RepoClear service responded by closely monitoring the market and revising risk parameters accordingly, ensuring that integrity of the infrastructure was maintained during this particularly volatile market period.

Roger Liddell, CEO, LCH.Clearnet said: "We're very proud to receive this award in recognition of our accomplishments. Looking ahead, we will consolidate our market leading position by continuing to enhance our risk and default management approaches, working with clearing members and end-users alike to reduce risk, reduce costs and improve market transparency.”

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.