LCH.Clearnet clears a record €152 trillion fixed income trades in 2011: up 11% on 2010

London, 13 January 2012

The total nominal value of fixed income trades cleared by LCH.Clearnet Group (LCH.Clearnet) in 2011 reached a record €152 trillion, an increase of 11% on 2010 as market participants have turned to clearing to mitigate counterparty risk in a highly volatile environment.

Monthly volumes throughout the year averaged at €12.7 trillion with over €600 billion in nominal value cleared daily, compared to €11.4 trillion cleared monthly and €500 billion daily in 2010.

This growth has been driven by increased use of clearing by existing and new participants.  Fixed income membership reached 79 with 11 new clearing members signing up to clear their fixed income business through LCH.Clearnet during 2011. 

The resilience of LCH.Clearnet’s default management process was demonstrated when it successfully wound-down MF Global’s open bond and repo positions in an orderly and timely manner.  This complex default was managed within the MF Global margin held with no loss to other market participants. 

John Burke, executive director and head of fixed income, LCH.Clearnet said; “Throughout this turbulent year, our market leading risk management solutions have delivered vital support to market participants, providing the confidence to continue trading within a secure, reliable and efficient environment. Our record in cleared fixed income volumes demonstrates the market’s continued appetite for clearing services and we look forward to working with our clients in 2012 to continue to enhance the offering.”

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

-Ends-

To view the press release as a pdf click here

About LCH.Clearnet

LCH.Clearnet Group Limited 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, commodities, energy, freight, interest rate swaps, CDS,  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 members’ 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.