LCH SA offering repo clearing on German debt

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  • Extended service offers greater choice and more netting opportunities for RepoClear’s members
  • Members of LCH SA can offset trades on German debt with eligible European repo transactions cleared at LCH SA, through T2S
  • Settlement available via Clearstream Frankfurt, Euroclear Bank or Euroclear France
  • LCH Ltd continues to offer clearing of German bunds and related repo transactions

LCH, a leading global clearing house, has extended its RepoClear service to offer clearing for cash and repo trades on German government securities via LCH SA, its continental Europe-based entity. This complements the existing service at LCH SA which already clears trades on Italian, French and Spanish government securities and will provide greater choice for members as to where to clear their trades. The availability of clearing trades on German debt will also continue to be offered through LCH Ltd, the Group’s UK entity.

The new offering covers trades on German government and regional debt, and Jumbo Pfandbriefe, allowing members clearing these products to net their positions with other European transactions cleared at LCH SA and settled through TARGET2-Securities (T2S), the pan-European platform for securities settlement. Members are able to use Clearstream Bank Frankfurt, or Euroclear France as their central securities depository, or Euroclear Bank as a settlement agent. 

Christophe Hémon, CEO, LCH SA, said: “As a clearing house we are consistently looking for ways to reduce our members’ risk. Netting is a very efficient way of reducing banks’ balance sheet usage and mitigate potentially costly capital requirements. The implementation of T2S brings with it an opportunity to expand the number of European trades eligible for balance sheet netting, providing greater operational and capital efficiency for our members. It will also allow our members to benefit from potential margin savings thanks to risk offsets among four main European debts. This extension of our RepoClear service is also another example of our commitment to bringing  greater choice to our customers.”

Michael Manna, Head of EMEA and APAC Fixed Income Financing, Barclays, said: “There is clear evidence that the roll out of T2S will bring tangible benefits towards improving the infrastructure services required to support liquidity in the European sovereign bond markets. Clearing is both an efficient way for us to guard against counterparty risk and optimise balance sheet usage, we look forward to using this new capability developed by LCH.”

Peter Fejfer Nielsen, Managing Director, Head of EMEA Finance Desk, Citi, said: “German Government debt repo clearing in LCH SA is a welcome development. This initiative offers the choice between clearing venues and the ability to improve operational efficiency. It is an important step to incorporate T2S across European government debt markets and will improve settlement and support our client activity.”

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About LCH

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.