Competition for forex clearing is hotting up as the IntercontinentalExchange (ICE) prepares to enter the market alongside players CME Group and LCH.Clearnet.
The FSA gave the go-ahead to LCH.Clearnet for its ForexClear venture on March 12, with the service beginning operation on March 19. It will clear foreign exchange non-deliverable forwards (NDFs); cash settled products that are actively traded in a range of high growth economy currencies.
Managing director of ForexClear Gavin Wells said: “In response to market demand and pending regulatory changes, we are delighted to be bringing LCH.Clearnet’s leading risk mitigating solutions to NDFs and we will be looking to broaden the service in line with client demand.”
Meanwhile, IntercontinentalExchange (ICE) plans to launch a clearing service for over-the-counter foreign exchange instruments this year, with the platform initially covering NDFs, and is scheduled for launch in the second quarter, having been in development for about 18 months.
"We have spent about a year-and-half putting this service together, and we wanted to wait to announce until we knew we would have a differentiated offering that would be able to compete vigorously for OTC foreign exchange clearing. Ice is already a leader in clearing OTC derivatives in two major asset classes - credit and energy - and our hope is that foreign exchange will be the third," says Thomas Farley, president of Ice Futures US in New York.
The clearer has already signed up 10 clearing members, including Bank of America Merrill Lynch, Citi, Credit Suisse, Deutsche Bank, JP Morgan, Morgan Stanley and UBS.
