As the forex market is maturing and becoming more ‘institutionalized’ and liquid clearing becomes one of the major issues facing this market. LCH’s ForexClear will handle clearing of FX NDFs through its 14 founding members. ForexClear was authorized by the FSA.
LCH.Clearnet Limited (LCH.Clearnet), the world’s leading independent multi asset class clearing house, today began clearing foreign exchange (FX). The service is supported by 14 major market participants who have been actively involved in its establishment. A number of additional participants are scheduled to begin clearing in the coming weeks.
The new service, ForexClear provides clearing for FX Non Deliverable Forwards (NDFs) and was designed in close collaboration with our members. The service has launched with clearing between direct clearing members, whilst actively consulting with clients to deliver a full clearing service to other current and prospective clearing members, and their global clients in due course.
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NDFs are cash settled products, actively traded in a range of high growth economy currencies. From launch the service will clear NDFs in the following currencies – Brazilian Real, Chilean Peso, Chinese Yuan, Indian Rupee, Korean Won and Russian Ruble all against the United States Dollar. Further currencies are being added to the service with the aim to provide 95% market coverage.
Gavin Wells, Managing Director, ForexClear, said; “In response to market demand and pending regulatory changes, we are delighted to be bringing LCH.Clearnet’s leading risk mitigating solutions to NDFs and we will be looking to broaden the service in line with client demand.”
ForexClear will build upon LCH.Clearnet’s 12 years of global OTC clearing experience. SwapClear, its Interest Rate Swap (IRS) service, has a proven track record of successfully mitigating risk for its users with over $280 trillion OTC IRS notional outstanding in 17 currencies. In 2008 LCH.Clearnet successfully resolved Lehman Brothers’ $9 trillion OTC IRS default and is now able to extend its unique and robust risk management methodology to the FX market through ForexClear.
Ian Axe, CEO, LCH.Clearnet Group Limited, said; “Our FX service highlights the strength and breadth of our unique OTC expertise and our commitment to providing market leading risk management solutions across a wide range of asset classes. We shall continue to evolve our offering in line with client demand to ensure it offers the most