LCH.Clearnet converts cleared OTC commodities derivatives to futures

Report date

Initiative responds to regulatory focus on increased market efficiency and transparency


LCH.Clearnet Ltd (LCH.Clearnet), the global clearing house, today announced that it has classified its cleared OTC commodities derivatives contracts as Block Futures. LCH.Clearnet launched this initiative in response to market and clearing member demand. By using a regulated trading venue, market participants trading these futurised products will benefit from increased efficiency and transparency, reduced collateral costs and mitigated risk.

Baltex and Cleartrade Exchange (CLTX), both regulated trading venues, will be the first platforms to register dry bulk FFA trades. CLTX will also process iron ore, steel, coal, fertiliser and container trades. Offering a choice of trading venues demonstrates LCH.Clearnet's commitment to working with multiple exchanges to provide optimum choice to its members.

Isabella Kurek-Smith, Director, Head of Freight and Commodity Markets, LCH. Clearnet Group said: "Improving efficiency is frequently at the heart of regulatory change. Teaming up with Baltex and CLTX means that our members and customers benefit from the efficiencies associated with using regulated trading venues. This is a further example of our commitment to provide an open and horizontal clearing model to our members."

Paul Stuart-Smith, COO, Baltex said: "As an FCA regulated platform, Baltex has a high level of regulatory compliance. Most of the major FFA brokers will be using Baltex on behalf of their clients and we are delighted to be working with LCH.Clearnet to provide an independent service which is of real value to the freight derivatives industry."

Richard Baker, CEO, CLTX said: "This project extends the collaboration between CLTX and LCH.Clearnet, bringing real value to our clients, who seek efficient and unencumbered integrated trading, broking and clearing solutions. The classification of futures and our straight-through-processing (STP) link with LCH.Clearnet extends trading opportunities, removes risk and enables regulatory certainty for our global client base.

For further information

Rhiannon Davies, LCH, 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.

About Baltex

Baltex is a multi-lateral trading facility, regulated by the FCA, which provides a central electronic trading venue for the freight derivatives market. Baltex is operated under the auspices of the Baltic Exchange, whose member firms encompass the majority of world shipping interests and which is the world's only independent source of maritime market information for the trading and settlement of physical and derivative shipping contracts.

About Cleartrade Exchange

Cleartrade Exchange (CLTX) is a regulated futures market for the global commodity derivatives marketplace. CLTX offers an electronic order book with a suite of over 40 different derivative contracts covering Energy, Freight, Metal and Agriculture.

CLTX is a Recognised Market Operator (RMO) regulated by the Monetary Authority of Singapore (MAS), incorporated in Singapore with offices in London.

Cleartrade Exchange, an EEX company, part of Deutsche Borse Group