LCH Clearnet’s ForexClear is launching a new service, developed with CLS, to allow physical settlement of cleared foreign exchange (FX) products.
The service is designed to improve risk management and efficiency, and generally improve confidence in the financial marketplace. It will give ForexClear participants access to a broader range of clearing services.
Settlement services will be operated by CLS, and should launch in 2016, subject to regulatory approval. If all goes to plan, it will expand to include other FX products, in line with demand.
Gavin Wells, Global Head of ForexClear, said: “By providing access to compression and netting services in the $275 billion-a-day FX options market this strategic initiative is playing a broader role in the industry-wide adoption of over-the-counter clearing.”
CEO of CLS David Puth added: “We have been working with the central counterparty community and other industry stakeholders to design and model the most effective way to mitigate settlement risk for cleared FX products.”
“Settlement risk is one of the most significant risks in FX. Our priority is to mitigate this risk, while increasing operational efficiency through our technology and connectivity.”
