HKEX’s OTC Clear Secures Japanese FSA License

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 Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term 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.

According to the statement, banks in Japan have shown a strong demand in clearing cross-currency Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term 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.”

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.”