Thomson Reuters, one of the industry’s paramount intelligent information and analytics providers, reported that its Thomson Reuters Swap-Execution Facility (SEF) has completed its latest round of certification testing for FX non-deliverable forwards (NDF) clearing by LCH.Clearnet’s ForexClear service, according to a Thomson Reuters statement.
LCH.Clearnet’s certification program was chosen to ensure the end-to-end benefit of execution venues, via a comprehensive integrated workflow in clearing FX NDF trades. Subsequently, LCH.Clearnet’s back testing has garnered fluid communication across the entire range of trade lifecycles for Thomson Reuters SEF users.
Pending customary regulatory notifications, the consequent certification from LCH.Clearnet will provide Thomson Reuters SEF with enhanced risk management – this includes the removal of counterparty credit risk that comes with a non-centrally cleared model.
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According to Jodi Burns, Global Head of Regulation and Post-Trade at Thomson Reuters, in a recent statement on the certification, “Impending regulations on capital requirements will increase the relative costs of settling non-centrally cleared derivatives trades bilaterally.”
“We recognize this cost, along with the benefits of removing counterparty credit risk, will naturally drive demand for FX NDF clearing even before it is mandated. Working closely with LCH.Clearnet, our objective was to ensure we meet the highest standards of performance and integration in providing access to central clearing to our customers on the Thomson Reuters SEF,” added Burns.
Thomson Reuters recently made headlines after announcing its latest foreign exchange (FX) trading figures for the month ending June 2015. In particular, the total average daily volumes (ADV) recorded in June 2015 on the company’s Thomson Reuters Matching and FXall platforms increased by 6% compared to May 2015, marking $375 billion.
Thomson Reuters (SEF) is part of Thomson Reuters’ FXAll platform and allows for the trading of FX non-deliverable forwards (NDFs) and FX options electronically through a multi-bank request-for-stream (RFS) liquidity and an anonymous order book. The platform was tailored to be in compliance with the United States’ Dodd-Frank Act (DFA). At the present, Thomson Reuters SEF handles nearly 66% of the market’s total average daily volumes of FX NDF bank-to-client SEF transactions.