LCH SwapAgent processes first trades for KfW using EUR Transport Currency
- KfW transacts first Transport Currency trades through LCH SwapAgent, with Bank of America, Commerzbank, Danske Bank and Santander as counterparties.
- Transactions highlight LCH SwapAgent’s commitment to working with participants in the uncleared derivatives market to develop innovative solutions.
- LCH SwapAgent offers standardised infrastructure and efficiencies to the uncleared derivatives market.
LCH SwapAgent, a service for the uncleared derivatives market, today announces it has welcomed KfW to the service, and that it has successfully processed the first Transport Currency trades between KfW and counterparties Bank of America, Commerzbank, Danske Bank and Santander.
KfW is one of the largest end-users of cross currency swaps globally and uses bilateral derivative transactions to hedge against interest rate and currency risks. It has worked closely with LCH SwapAgent and its market participants to bring Transport Currency trades to fruition. The Transport Currency settlement methodology enables market participants to use EUR for daily margin payments on cross-currency swaps and benefit from standardised discounting and valuations. This important innovation leverages the unique footprint of LCH SwapAgent as a trusted third-party in the bilateral derivatives market as it develops solutions that increase standardisation and reduce risk.
Nathan Ondyak, Global Head of LCH SwapAgent, said: “We are pleased to have worked with KfW on this new development for derivatives markets, and to welcome them as a member of LCH SwapAgent. It has been rewarding to work so closely with KfW all the way from idea generation, through to onboarding and finally, adoption. Transport Currency is a unique proposition for derivatives markets that we look forward to developing further in collaboration with market participants.”
Stephan Blanke, Head of Derivatives, KfW, said: “We very much welcome the establishment of our cooperation with LCH SwapAgent to explore a novel solution to extend standardisation in cross-currency swap markets. KfW's funding and hedging activity is based on a broad diversification of business partners. Thus, it makes sense for us to support LCH SwapAgent in increasing liquidity and improving market access for all users of derivatives. It is also a valuable tool for KfW from a risk and pricing perspective."
SwapAgent has continued to see impressive growth of its service. In January 2023, it surpassed $8 trillion in notional registered since launch. The service also registered record volumes in 2022, with cross-currency volumes across the service reaching $2.7 trillion of notional registered.
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For further information
Harriet Leatherbarrow / Nandeep Roopray
Tel: +44 (0)20 7797 1222
LCH Limited and LCH S.A. (collectively, “LCH”) are leading multi-asset clearing houses that provide 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 extensive choice and efficiencies to the marketplace.
LCH operates clearing houses incorporated in the UK and France, with offices in the United States and 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. In addition, SwapAgent Limited serves the non-cleared derivatives market through its SwapAgent service, which extends a number of the efficiencies applicable to clearing to the market, without acting as a central counterparty.
LCH Limited, LCH S.A. and SwapAgent Limited are each majority owned by London Stock Exchange Group PLC (LSEG.L), an international markets infrastructure business that sits at the heart of the world's financial community.
Further information on LCH can be found at www.lch.com.