LCH.Clearnet Launches Buy-side Clearing of FX Derivatives

07 November 2013

LCH.Clearnet Ltd’s (LCH.Clearnet) ForexClear has expanded its market-leading FX derivatives clearing service with the launch of a new offering for buy-side clients.

ForexClear is now available to buy-side clients through one of three Futures Commission Merchants (FCMs) connected to the service. The new offering also provides enhanced asset protection based on the proven LSOC (legally segregated, operationally commingled) model.

Achieving buy-side client access to ForexClear has been the result of an industry-wide collaboration and comes at a critical time ahead of the anticipated global FX clearing mandates. Clients can now benefit from LCH.Clearnet’s world-class risk management capabilities, proven default management expertise and superior asset protection through the segregation and portability of margin collateral.

The new service will initially offer FX non-deliverable forwards (NDFs) out to two years, with plans to extend the product range in 2014. ForexClear today clears the majority of the dealer-to-dealer market with over $1.2 trillion in over 100,000 tickets cleared since the service was launched in March 2012. 

“Our experience with interest rate swaps taught us that clients who prepare in advance receive the most support and can position themselves a step ahead of the regulatory process. Early adoption will help ensure all participants benefit from a more resilient, robust OTC FX infrastructure,” said Gavin Wells, CEO of ForexClear. “Looking ahead, we recognise that choice and liquidity are key considerations for clients and members alike and intend to further expand the service’s clearable product range, in line with demand.”

Clients can access the new offering through the following FCMs: Deutsche Bank, J.P. Morgan and Morgan Stanley.  More FCMs are expected to be added in the coming months.

Paul Houston, OTC FX Clearing Head & European Head of FX Prime Brokerage, Deutsche Bank said: “This is an important development that will benefit the FX industry in the long-term. Deutsche Bank is delighted to have been selected by Harmonic Capital Partners LLP to clear their first NDF trades. We look forward to working closely with ForexClear to further develop the service.”

Andres Choussy, Global co-head of OTC Clearing, J.P. Morgan said: “The timing of this launch gives us the opportunity to fully prepare ahead of the proposed regulatory mandates. The appetite to clear the FX market is growing and our priority is to accommodate the needs of our clients to facilitate a smooth and efficient transition.”

Jason Swankoski, US Head of OTC Clearing, Morgan Stanley, said: "Morgan Stanley is fully committed to supporting its clients as the FX clearing landscape continues to evolve. Connecting to LCH.Clearnet’s ForexClear as an FCM member is an important strategic initiative for the market, our clients and for Morgan Stanley.  The addition of ForexClear to our existing client clearing services maintains our position as a global market leader in FX and Derivatives Clearing."

The new service follows a series of achievements which are in line with changing regulations to help users meet the new requirements. In January 2013 the service began to support regulatory reporting of FX trades in the US. In March 2013 ForexClear introduced straight through processing to meet CFTC regulations. This minimizes the time for clearing to a few seconds.

To view this press release as a PDF click here

About LCH.Clearnet

The LCH.Clearnet Group is a leading multi-asset class and multi-national clearing house, serving major exchanges and platforms as well as a range of OTC markets.

LCH.Clearnet’s world-class risk management framework provides exceptional levels of protection to international markets, as has been proven through the management of recent defaults. As demand for robust clearing services continues to grow, LCH.Clearnet is committed to achieving the highest standards of risk management across all asset classes cleared.

LCH.Clearnet is majority owned by London Stock Exchange Group (LSE.L), a diversified international exchange group that sits at the heart of the world's financial community.
For more information on LCH.Clearnet visit www.lchclearnet.com/media_centre.

Contact: Rachael Harper +44 207 426 7175