Record clearing volumes at LCH with growth across services and regions; expansion of offering for the uncleared derivatives market
- Record volumes registered across LCH clearing services including SwapClear, ForexClear, RepoClear, EquityClear and CDSClear, as well as at SwapAgent
- Expansion of offering for the uncleared derivatives market through acquisitions of Quantile and Acadia*
LCH, part of LSEG (London Stock Exchange Group), today announced record clearing volumes across its services with further product and regional expansion in 2022. ForexClear, in collaboration with LSEG’s FX capital markets business, announced plans to launch an NDF matching venue in Singapore*, while the expansion of CDSClear continued with the launch of clearing for Single Name Sovereigns, client clearing of Credit Index Options and additional Indices across regions globally. 2022 was also a significant year for SwapClear ahead of the USD Libor conversion to SOFR in Q2 2023 – with more than 80% of all new USD swap risk cleared by SwapClear now SOFR-based.
Daniel Maguire, Group Head, Post Trade, LSEG, and CEO, LCH Group, said: “LCH has continued to deliver resilient multi-asset post trade services to its customers and members during a year when markets have seen significant volatility. The record volumes achieved across our services are testament to our customer centric approach and partnership with the market to ensure they are supported through the benefits of clearing.
“With milestone events such as the cessation of US Dollar Libor impacting the market in 2023, we will continue to partner with our customers and members to provide robust risk management, capital efficiencies and operational benefits. The acquisitions of Acadia and Quantile will also add to our strategy to enhance and grow our multi-asset Post Trade offering for the uncleared derivatives market.”
SwapClear registered a record 8.2 million trades in 2022, up 20% from 2021. Total notional cleared at the service increased 18% year-on-year to reach over $1 quadrillion, with clearing of inflation swaps reaching a record notional high of $9.3 trillion in 2022. As testament to the progress made in the transition to risk-free rates (RFRs), cleared swap liquidity has grown considerably over the last 12 months – with over 80% of all new USD swap risk cleared at SwapClear now SOFR-based versus less than 10% in Q2 2021. SwapClear has also supported the move to RFRs in the Nordics by extending clearing eligibility to SWESTR (Swedish krona short-term rate) overnight index swaps (OIS) and is the first to launch the clearing of DESTR (Denmark short-term rate) OIS. Over the year, SwapClear continued to grow across Asia, registering a nearly 30% year-on-year increase in notional cleared in APAC currencies, and welcoming DBS Bank as its first direct member in Singapore.
SwapAgent saw a 130% year-on-year increase with over $3.9 trillion of notional registered. Further supporting the industry’s transition to risk-free rates, SwapAgent registered its first CIBOR/SOFR cross-currency basis swap between two Nordic banks, Nordea and Danske. Cross-currency volumes across the service reached record highs with $2.7 trillion of notional registered in 2022, including a 112% increase in JPY cross currency volumes. Membership at SwapAgent also saw growth in 2022, increasing to 23 dealer groups and 37 entities, up from 19 groups and 33 entities at the start of the year.
Across LCH Ltd and SA, RepoClear processed €288.4 trillion of nominal across 12.1 million trade sides cleared, both record highs for the service. RepoClear SA processed a record €233.5 trillion nominal of Euro debt across 10.7 million trade sides during 2022, up 20% and 14% year-on year, respectively. RepoClear Ltd saw year-on-year increases of 29% and 20% with €54.9 trillion of UK Gilt nominal cleared across 1.36 million trade sides, respectively. There are now 31 Sponsored Members for clearing of UK Gilts in RepoClear, with peak open outstanding volume growing over 25% in 2022. LCH SA’s RepoClear also expanded its settlement connections to investor CSDs so that members are now able to settle Dutch Government bonds at Euroclear Netherlands and Austrian and Spanish Government bonds at Clearstream Banking Frankfurt. In June 2022, RepoClear SA introduced an enriched VaR initial margin methodology re-affirming its commitment to improve margin efficiencies for its membership and reduce costs, and later in July 2022, launched award winning Settlement Monitor, a tool to perform meaningful analysis of settlement fails and improve settlement performance.
2022 was also a stellar year for ForexClear with three award wins and a record $24.8 trillion in notional cleared, up 14% on 2021. A record $516 billion notional was cleared by clients, up 112% on 2021. ForexClear also cleared $1.01 trillion notional in FX Options for the first time in a single calendar year. Growth is expected to continue with the service having launched clearing for USD/JPY and EUR/JPY FX Options. In May 2022, ForexClear and its divisional partners within LSEG, announced plans to launch the NDF matching platform in Singapore*. The integration of clearing into the design of the NDF matching platform creates a trading platform where market participants can decide on a pre-trade basis to clear their NDFs. ForexClear also processed its first client trades through FXall and FX Connect TradeNeXus. More than 50 clients are now live, including Schroders, the first European asset manager to clear with ForexClear.
In 2022, CDSClear continued the growth of its clearing services to include Single Name Sovereigns, client clearing of Credit Index Options, and additional Indices and their Singles Names covering Asia ex Japan, Australia, Western Europe and Emerging Markets – making it the CDS CCP with the broadest set of products globally. The service registered a record €3.36 trillion in Index, Single Names and Options notional cleared, up 47% from 2021 (€2.28 trillion), including a record $124 billion in US Index and Single Names notional cleared. CDSClear also achieved an annual record high market share of 52% on European Single Names in 2022.
The EquityClear service in LCH Ltd cleared a record high 2.2 billion trade sides in 2022, a 15% increase from 2021. In LCH SA, EquityClear further expanded its European equities offering with connections to Cboe Europe BV (including the off-book trade reporting service BXTR) and Aquis Exchange Europe. During the year, LCH SA set daily records on its cleared products including 378k Commodity Futures contracts cleared on 24 February 2022 and 43k Equity Options listed in Oslo cleared on 4 November 2022. LCH SA also set a new annual record on Commodity Options with 5.2 million contracts cleared in 2022 compared to 4.9 million in 2021. Enhancements to the service in 2022 also included an enriched VaR initial margin methodology to improve margin efficiencies and reduce costs.
* Subject to regulatory approval
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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