HKEX’s OTC Clear Secures Japanese FSA License

The licence will allow the company to offer clearing services to Japanese banks.

OTC Clearing Hong Kong Limited (OTC Clear), the central counterparty subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX) has received approval from the Financial Services Agency (FSA) of Japan to offer client clearing services to banks in the country.

In a statement released by HKEX this Wednesday, the license from the Japanese regulator allows OTC Clear to become a Foreign Financial Instruments Clearing Organisation. Therefore, it can offer clearing services to Japanese banks.

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According to the statement, banks in Japan have shown a strong demand in clearing cross-currency swaps with the central counterparty, which prompted the move to Japan. Furthermore, the license opens up a new region for the company to provide over-the-counter derivatives clearing and settlement services.

Commenting on the announcement, Calvin Tai, HKEX Co-President and Chief Operating Officer said: “Japanese institutions play an important role in the OTC derivatives market, and this addition demonstrates our commitment to expand our fixed-income and currency business offering in the region and internationally. This great milestone reflects further recognition of OTC Clear by international regulators.”

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Barclays joins OTC Clear

Established in 2013, OTC Clear was created to provide OTC derivatives central clearing services. In addition to being regulated in Japan, the company also operates in the United States, European Union, and Australia.

In today’s statement, it was also revealed that Barclays Bank PLC had joined the central counterparty as its Clearing Member – the sixth for Europe.

“We are pleased to have Barclays join OTC Clear as a direct Clearing Member, leveraging our unique clearing solutions in the offshore renminbi, or CNH.  As a global market leader in the Asian Time Zone, we help connect Mainland Chinese banks to the global markets,” Tai added.

Speaking on the partnership, Kelvin Sze, Barclays’ Head of Macro Trading, Hong Kong continued: “We are delighted to be a direct clearing member of HKEX’s OTC Clear. OTC Clear has been a significant industry development with its well-established network of members.”

“As one of the founding shareholders, we are looking forward to facilitating greater access for our counterparties in the region with this additional clearing channel to meet their offshore renminbi needs.”

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