LCH Launches FX Forwards Clearing Through ForexClear

The clearinghouse is clearing FX forwards on eight currency pairs.

Global clearinghouse LCH has expanded its deliverable foreign exchange (forex) offering to now include FX forwards for eight currency pairs through its ForexClear service, the company announced this Wednesday. 

ForexClear is the clearinghouse’s forex derivatives clearing service. According to the statement, LCH is the first CCP (central counterparty clearing) to clear forex forwards.

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As to its motivation, LCH said that it has expanded its product offering due to customer demand, and today’s announcement builds upon its launch of deliverable FX options clearing in 2018.

LCH clears FX forwards on eight pairs

In particular, LCH is clearing FX Forwards on eight currency pairs: AUDUSD, EURUSD, GBPUSD, USDJPY, USDCHF, EURJPY, EURCHF, EURGBP with physical delivery. 

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Paddy Boyle of LCH
Paddy Boyle, Head of ForexClear, LCH
Source: LinkedIn

Commenting on the announcement, Paddy Boyle, Head of ForexClear, LCH, said: “Making FX Forwards available for clearing is a significant moment for the market. This initiative substantially broadens the proportion of the FX market which is able to be cleared. As a result, we’re pleased to be bringing the risk management and efficiency benefits of clearing to an even larger segment of the market.”

The addition of FX forwards to the company’s deliverable clearing services marks a big step for LCH in the universe of FX derivatives now available for clearing. In the future, ForexClear plans to add further forex products to its service, based on demand and subject to regulatory approval.

“The launch of cleared FX Forwards unlocks more opportunities for improved risk management and operational efficiencies. It’s always beneficial for the dealer community to have choice and today’s announcement is an exciting step for the advancement of the FX forward market,” added Tom Prickett, co-head of EMEA Rates, J.P. Morgan.

The launch of FX forward clearing through ForexClear, incorporates the first physical FX settlement service for cleared FX products, which LCH developed in collaboration with CLS, according to the statement released today.

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