LCH goes live with CLS’ deliverable FX Options clearing offering

LCH goes live with CLS' deliverable FX Options clearing offering

The global clearing house LCH today announced that it has launched deliverable FX options clearing. Barclays, Citi and J.P. Morgan are among the first participants to use the service, with further banks expected to shortly start clearing the product.

The move incorporates the first physical FX settlement service for cleared FX products, which LCH has developed in collaboration with CLS. Clearing FX Options extends LCH’s ForexClear service, a clearer of FX NDFs, clearing around $70 billion in average daily volume.

Paddy Boyle

Paddy Boyle

Paddy Boyle, Global Head of ForexClear, LCH, said:

Clearing FX Options is an exciting milestone for LCH and the FX market. The launch of this service extends the benefits of clearing to more products and participants in the FX market, enabling them to benefit from the risk management, margin, capital and operational efficiencies of clearing. We’re delighted to partner with CLS to deliver this innovative new service.

Alan Marquard, Chief Strategy and Development Officer, CLS, commented:

This initiative marks a significant step forward for the global FX community. By working with LCH, we will reduce settlement and counterparty risk while improving efficiencies for those operating in the OTC cleared FX market.

Andrew Batchelor, MD, Global FX Business Manager, Barclays, added:

The strong benefit of clearing deliverable FX Options has been apparent since the introduction of the uncleared margin rules in 2016. LCH has overcome enormous complexity in development of the product through innovative thinking and strong partnerships with CLS and members. We are delighted to be a part of the launch of this ground breaking solution for the broader market.

The launch of FX Options clearing capabilities unlocks significant new opportunities for market participants by enabling operational efficiency while optimizing risk management,” shared Mike Lawrence, Citi’s Global Chief Administrative Officer for Foreign Exchange and Local Markets said. “We are pleased to work with LCH and CLS to extend the benefits of this initiative to our clients and look forward to seeing widespread market adoption of this new service.

Robin Wemyss, Global Head of FX Options Trading, J.P. Morgan, concluded:

Clearing deliverable FX Options and their hedges is a significant step for the market. We look forward to seeing the number of counterparts and the associated liquidity grow in the coming months.

LCH is clearing FX Options on eight currency pairs: AUDUSD, EURUSD, GBPUSD, USDJPY, USDCHF, EURJPY, EURCHF, EURGBP with physical delivery, as well as spot and forward hedges. ForexClear plans to add further FX products to its service in line with demand, and subject to regulatory approval.

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