LCH to launch LCH SwapAgent, a centralised service for the non-cleared derivatives market
LCH SwapAgent will provide centralised trade processing, valuation, margining, risk calculation and optimisation services for the OTC bilateral rates & FX markets
- Service is designed to facilitate the standardisation and streamlining of bilateral OTC market infrastructure and end to end workflow and processing
- 11 dealers confirm support
- Complements LCH’s strong track record in serving cleared OTC markets
- Expected to go-live in H1 2017, subject to necessary approvals
LCH, a leading global clearing house, announced today that it will be launching a new service for the non-cleared derivatives market. LCH SwapAgent will benefit from LCH’s expertise in serving and managing risk for the cleared rates & FX derivatives market, providing market participants with a number of solutions designed to materially improve standardisation, efficiency and simplicity in the bilateral derivatives market.
LCH SwapAgent will act as an independent calculation agent, facilitating the calculation and exchange of bilateral margin and settlement payments, but will not become the central counterparty to the trade. LCH SwapAgent’s customers will be able to benefit from services including CSA standardisation, end-to-end trade life cycle management, independent valuation and risk calculation, dispute elimination, payment netting and compression. The service, which is expected to go live in H1 2017, will be available for all market participants trading non-cleared OTC interest rate derivatives. 11 dealers have confirmed their support for LCH SwapAgent including Bank of America Merrill Lynch, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley and RBS.
Nathan Ondyak, Global Head of LCH SwapAgent, LCH, said: “We believe that an efficient bilateral market is critical to the functioning of the broader OTC market. SwapAgent increases the efficiency of non-cleared derivatives trading by extending the centralised clearing infrastructure – standardised document terms, trade processing, margining and payment processing – without requiring novation to a central counterparty or a change to the underlying trade terms.”
Will Roberts, Head of Global Rates Trading, Bank of America Merrill Lynch, said: “Due to the introduction of the bilateral margin rules the market is increasingly looking for ways to reduce the costs of bilateral trading. Using LCH SwapAgent provides an opportunity to simplify our bilateral post-trade processes and meet the emerging obligations in a more efficient manner.”
Daniel Maguire, Global Head of Rates & FX Derivatives, LCH, added: “We have invested a tremendous amount of effort consulting with market participants and considering how to apply our track record of innovation and provenance in cleared OTC interest rates & FX to the OTC bilateral market. LCH SwapAgent is a natural extension and complement to our existing cleared services.”
For further information
Rhiannon Davies, Tel: +44 (0)20 7426 7523
Lucie Holloway, Tel: +44 (0)20 7797 1126
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LCH is a group of leading multi-asset clearing houses that provides proven risk management capabilities across a range of asset classes. As demand for robust clearing services continues to grow, LCH is committed to maintaining the highest standards of risk management across all our services.
As the markets’ partner, LCH operates an open access model, offering a choice of execution venues, delivering unprecedented choice and efficiencies to the marketplace.
LCH operates clearing houses around the world, with clearing houses incorporated in the UK, France and the United States with additional offices in the Asia Pacific region. It offers clearing services across asset classes including OTC and listed rates; CDS and FX; fixed income; commodities; cash equities and equity derivatives.
LCH is majority owned by London Stock Exchange Group (LSE.L), an international markets infrastructure business that sits at the heart of the world's financial community.