LCH.Clearnet eliminates over $100 trillion in notional in 12 months

Report date
  • Compression drives record reduction in notional outstanding at SwapClear during 2015
  • $323 trillion compressed in 2015, contributing to net notional reduction of $107 trillion
  • Notional outstanding now at $254 trillion, down from almost $362 trillion on 1 January 2015
  • Results highlight strong uptake of compression services by members and their clients
  • Extensions of blended-rate compression service contribute to increased compression activity

LCH.Clearnet Ltd, the global clearing house, today announced that its SwapClear service has eliminated over $100 trillion in notional since 1 January 2015. This net reduction in notional outstanding has been driven by an acceleration of compression activity by SwapClear’s members and their clients throughout the year.

SwapClear’s notional outstanding reached an all-time high of $426 trillion in November 2013.  Increased compression activity over the last two years has driven down notional outstanding to its present levels. Amidst record volumes of cleared trades in 2015, SwapClear compressed $323 trillion over the year, reducing the notional outstanding from almost $362 trillion at the start to the year to $254 trillion. This was achieved through its proprietary compression services, such as blended-rate, and those offered in partnership with TriOptima.

Members are currently able to compress interest rate swaps (IRS), forward rate agreements (FRA) and overnight index swaps (OIS) using the service. Plans to introduce compression services for inflation swaps and FX non-deliverable forwards (NDF) remain in place for 2016.

Cameron Goh, Head of Clearing Solutions, SwapClear and Listed Rates, LCH.Clearnet, said: “Eliminating over $100 trillion in net notional in a calendar year is an important milestone in our efforts to increase efficiency for the market. With the European mandate for clearing IRS fast approaching, we’ve seen a marked increase in cleared volumes at SwapClear.

“As the capital requirements under Basel III begin to bite, banks and clearing brokers are continually looking at ways to reduce exposures and drive down their clients’ and their own notional outstanding. At the same time, buy-side firms are keen to make operational savings by managing their books as efficiently as possible. Compression enables our members and their clients to do just that by offsetting compatible trades, allowing them to achieve significant capital and operational efficiencies. We expect to see growing momentum for use of these services as we extend the offering to other products in 2016.”

For further information
Rhiannon Davies, Tel: +44 (0)20 7426 7523
Lucie Holloway, Tel: +44 (0)20 7797 1126

LCH on social media

Follow us on Twitter
Follow us on LinkedIn

About LCH.Clearnet
The LCH.Clearnet Group is a leading multi-asset class and multi-national clearing house, serving major exchanges and trading platforms as well as a range of OTC markets.

LCH.Clearnet’s world-class risk management framework provides exceptional levels of protection to international markets, as has been proven through the management of past defaults. As demand for robust clearing services continues to grow, LCH.Clearnet is committed to achieving the highest standards of risk management across all asset classes cleared.

LCH.Clearnet Group is majority owned by London Stock Exchange Group (LSE.L), a diversified international exchange group that sits at the heart of the world's financial community.