LCH begins clearing of non-deliverable interest rate swaps

The global clearing house LCH has just announced that it has begun clearing of non-deliverable interest rate swaps. Market participants are now able to clear this product denominated in Chinese Yuan, Korean Won and Indian Rupee. This is the first time that SwapClear has offered clearing of derivatives denominated in these currencies.

  • Clearing for Chinese Yuan, Korean Won and Indian Rupee-denominated non-deliverable interest rate swaps
  • J.P. Morgan and Standard Chartered among first participants to clear the products
  • SwapClear now offers clearing for derivatives across 21 currencies
  • Move follows a record quarter for SwapClear’s volumes, with $292 trillion cleared in Q1 2018

The product has been launched in response to increased customer demand, particularly among clearing members and clients based in the Asia-Pacific region, with 17 dealers having completed default management testing in preparation for clearing. The additional currencies add to SwapClear’s large pool of cleared OTC liquidity, providing customers more opportunities to benefit from portfolio margining, counterparty risk reduction and operational efficiencies of clearing.

SwapClear plans over time to extend the non-deliverable product set to additional emerging market currencies, subject to regulatory approval.

Cameron Goh, Global Head of Product, Rates, LCH, said:

We’re delighted to have processed our first ever non-deliverable swaps at LCH, a move which has further extended our global clearing reach and expands the range of currencies to 21. We’ve seen tremendous demand for these emerging market focused products and will continue partnering with our members and their clients to deliver the increased capital and margin efficiencies that can be achieved through central clearing.

Vikas Gupta, head of North Asia currencies and emerging markets trading, J.P. Morgan, commented:

We are pleased to be part of LCH’s launch into Asia’s emerging market currency non-deliverable swaps. We look forward to offering this product to our clients and deepening the liquidity in this market together with LCH and other participants.

Charles Feng, Head, FX, Rates & Credit Trading, Greater China, Standard Chartered, added:

Being able to clear our non-deliverable swaps book at LCH enables us to effectively manage counterparty risk, while offsetting our margin obligations with other correlated products we clear at SwapClear. We’re pleased to be among the first participants to clear this product at LCH.

Luke Brereton, Co-Head, Prime Services, Standard Chartered, concluded:

In line with our continuing commitment to service our clients we are pleased to be among the first clearing brokers to offer client clearing of these products at LCH.

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