LCH.Clearnet launches buy-side clearing of FX derivatives in Europe

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  • European offering expands on ForexClear’s US client clearing model
  • Four banks signed up as clearing brokers
  • Variety of account structures provide end users with increased protection and asset segregation   

LCH.Clearnet Limited (“LCH.Clearnet”), the global clearing house, today announced that ForexClear has extended its client clearing offering to include European model account structures. End-users trading Non Deliverable Forwards (NDFs) are now able to connect to four clearing brokers offering the service, including HSBC, Société Générale and Standard Chartered Bank. As a result, a greater number of firms in Europe will now be able to access the benefits of NDF clearing, including enhanced risk management and improved capital efficiencies.

Buy-side firms and banks wishing to clear NDF trades are able to choose a clearing broker and their preferred level of asset protection from a selection of account structures including Individually Segregated Accounts (ISAs) and Gross Omnibus Segregated Accounts (OSAs). This initiative enriches ForexClear’s existing US client clearing model with its Legally Separated Operationally Commingled (LSOC) account structure, which was launched in 2013.

Gavin Wells, Global Head of ForexClear, LCH.Clearnet, said: “With the margin rules on non-centrally cleared derivatives being implemented from 2016 and Basel III shortly thereafter, the OTC derivatives market will continue to evolve. In preparation for this firms that trade FX derivatives are looking for services that deliver capital efficiency. By clearing NDF trades, users benefit from improved counterparty risk management, increased capital efficiency through services such as multilateral netting, as well as simplified initial margin and variation margin exchange. We’re delighted to be working with four clearing brokers to offer ever greater efficiency and reduced operational complexity to the Foreign Exchange markets.”

Frederic Boillereau, Global Head of FX and Commodities, Global Head of Corporate Sales, HSBC, said: "Clearing is an effective way for our clients to manage counterparty risk. We welcome ForexClear’s European client clearing offering and believe it will be an important tool for our clients as the regulatory and market landscape develops."

Frederic Colette, Managing Director, Société Générale Prime Services, said: “This launch is an important development for Société Générale and the industry, giving buy-side firms time to prepare for clearing NDFs, ahead of the implementation of the margin rules on bilateral OTC derivative transactions. It is important that in line with our ETD clearing capability we give our clients the choice that they need across all asset classes to realise operational, margin and capital efficiencies. We are therefore pleased to be live members of ForexClear’s client clearing service in Europe as well as in the US for NDFs.”

Andrew Sterry, Co-Head of Standard Chartered ECLiPSe, said: "We are seeing increasing number of clients interested in clearing these products due to their evolving business models as a result of the ongoing capital and margin regulatory developments.  The launch of ForexClear’s client clearing offering in Europe allows Standard Chartered to better service our clients through their model of choice.”

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

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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.