LCH.Clearnet Expands ForexClear Offering to European Clients

LCH.Clearnet has expanded its US clearing model of FX derivatives to include European clients.

Global clearing house, LCH.Clearnet Limited, has launched its offering of buy-side clearing of FX derivatives to European clients, according to an LCH.Clearnet statement.

More specifically, LCH.Clearnet’s ForexClear has now been extended to include European model account structures. This utility grants end-users opting to trade Non Deliverable Forwards (NDFs)the ability to integrate into four clearing brokers offering the service, including HSBC, Société Générale, and Standard Chartered Bank. The initiative expands on an already robust client clearing model implanted by ForexClear’s US offering, which was launched back in 2013.

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Consequently, a multitude of firms in Europe will now be able to garner access to NDF clearing, as well as augmented risk management and improved capital efficiency strategies.

Moreover, buy-side firms and banks wishing to clear NDF trades are also able to choose a clearing broker and a given level of asset protection via a cascade of account structures – these include, among others, Individually Segregated Accounts (ISAs) and Gross Omnibus Segregated Accounts (OSAs).

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According to Gavin Wells, Global Head of ForexClear, LCH.Clearnet, in a recent statement on the launch, “With the margin rules on non-centrally cleared derivatives being implemented from 2016 and Basel III shortly thereafter, the OTC derivatives market will continue to evolve. In preparation for this firms that trade FX derivatives are looking for services that deliver capital efficiency.”

“By clearing NDF trades, users benefit from improved counterparty risk management, increased capital efficiency through services such as multilateral netting, as well as simplified initial margin and variation margin exchange. We’re delighted to be working with four clearing brokers to offer ever greater efficiency and reduced operational complexity to the Foreign Exchange markets,” he added.

“Clearing is an effective way for our clients to manage counterparty risk. We welcome ForexClear’s European client clearing offering and believe it will be an important tool for our clients as the regulatory and market landscape develops,” noted Frederic Boillereau, Global Head of FX and Commodities, Global Head of Corporate Sales, HSBC, in an accompanying statement.

Last month, LCH.Clearnet began offering clearing services for inflation swaps – this made the company the first Central Counterparty Clearing House (CCP)to provide clearing services for inflation-linked swaps.

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