LCH.Clearnet launches inflation swaps clearing

Report date
  • First CCP to clear inflation-linked swaps
  • 11 members live and clearing trades
  • Barclays and J.P. Morgan conduct first ever cleared inflation swap
  • Participants benefit from improved capital, margin and operational efficiency through portfolio margining

LCH.Clearnet Limited (“LCH.Clearnet”), the global clearing house, today announced that it is now offering inflation swap clearing through its leading SwapClear service. Expanding the range of derivatives eligible for clearing will allow market participants trading UK, European, and US inflation-linked products to benefit from the efficiencies and enhanced risk management associated with central clearing.  

Trading in inflation-linked swaps is popular among asset managers and pension funds looking to guard against rises in inflation and interest rates. Firms opting to clear inflation swaps through SwapClear are able to offset their margin requirements with correlating interest rate derivatives cleared at LCH.Clearnet.

Nathan Ondyak, Head of Products and Markets, SwapClear, LCH.Clearnet, said:  “After thorough risk reviews and testing, we are proud to be the first CCP to secure regulatory approval under both the EMIR and US Commodity Exchange Act regulatory frameworks for inflation swaps clearing.  Clearing this new product, which shares structural similarities with other cleared interest rate derivatives, is a significant move for the market and underlines our commitment to providing safe and innovative risk management services to our members and their clients.”

Simon Wilkinson, Head of LDI Funds, Legal & General Investment Management, said: “Risk management is a top priority for fund managers. Central clearing significantly mitigates counterparty risk and we welcome industry moves to provide clearing services for inflation swaps.”

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

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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.