LCH.Clearnet Obtains OTC Clearing License in Japan

LCH.Clearnet Ltd, a worldwide clearing house, has received formal approval in the form of a clearing license from the Japanese Financial Services Agency (FSA), allowing the group to offer the clearing of non-yen OTC interest rate derivatives to Japanese financial institutions, according to an LCH.Clearnet statement.

The license is important for LCH.Clearnet as it effectively enables the clearing house process and clear non-yen OTC interest rate derivatives on behalf of Japanese banks via its SwapClear service. More broadly speaking, the new license also helps foster integration of the global Interest Rate Swap market into Japan through the group’s clearing infrastructural capabilities.

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Moreover, the new license will allow banks utilizing LCH.Clearnet’s services to circumvent international subsidiaries, previously the only such way to access its SwapClear service. This will help banks directly assimilate and support this service suite however, ultimately facilitating more streamlined clearing for venues.

According to Suneel Bakhshi, Group CEO, LCH.Clearnet, in a recent statement on the license: “We are delighted that the FSA has awarded LCH.Clearnet a licence to clear interest rate derivatives in Japan. Tokyo is an important global financial centre and home to one of the largest OTC derivatives markets in the world. By providing our clearing service to Japanese financial institutions, we hope to strengthen further Tokyo’s position as a global player in derivatives.”

“We’ve seen significant demand for our services as firms seek to benefit from the efficiencies that come with clearing and associated services such as compression. We are fully committed to becoming integrated into the Japanese market and are proud to be the first overseas clearing house to be awarded a Japanese licence,” he added.

The reception of its latest license represents the second such instance at LCH.Clearnet in as many months. Earlier this year, the group achieved Clearing House Recognition from the Monetary Authority of Singapore (MAS), helping shore up LCH.Clearnet’s status in the region and more specifically domestically, with specific regard to the group’s EnClear, ForexClear, and SwapClear services.