Clearing house LCH has announced that Commonwealth Bank of Australia (CBA) has become its first Australian Protected Payments System (PPS) Bank. Having an Australian PPS Bank enables LCH to make and receive Australian Dollar payments in the local time zone.
The PPS system is the method by which LCH calls and pays cash margin to its clearing members. As part of the membership criteria for LCH, members are required to maintain a PPS bank account. Overseen by the Bank of England, PPS has been in operation in London for over 20 years, and also operates in New York. The move follows the establishment of LCH’s central bank account with the Reserve Bank of Australia in 2015, and there is the potential to add more Australian banks to the system in the coming months and widen participation to additional members.
Gerard Smith, Director of Collateral Services, LCH, said:
Signing Commonwealth Bank of Australia as our first Australian PPS bank generates more flexibility in making and receiving cash payments in the local timezone. Asia Pacific is a region of strategic importance for LCH and we understand the importance of engaging with local partners to offer the best possible service to our members and their clients.”
Andrew Hinchcliff, Executive General Manager, Markets, Commonwealth Bank of Australia, said:
We’re delighted to be the first Australian bank to offer PPS services to LCH. Clearing has gained significant momentum in Australia in recent years and this initiative makes posting cash collateral at LCH more flexible than ever before.”