LCH.Clearnet has re-classified its OTC commodities derivatives contracts as block futures trades, in response to demands from market and clearing members.
The clearing house will work with multiple exchanges in order to provide additional choice to its members, and it is hoped that clients will benefit from increased efficiency, greater transparency, reduced collateral and mitigated risks.
Two regulated trading venues, Baltex and Cleartrade Exchange (CLTX), will be the first platforms to register dry bulk forward freight agreement (FFA) trades.
Isabella Kurek-Smith, director and head of freight and commodity markets at LCH. Clearnet Group, said: “Improving efficiency is frequently at the heart of regulatory change. Teaming up with Baltex and CLTX means that our members and customers benefit from the efficiencies associated with using regulated trading venues. This is a further example of our commitment to provide an open and horizontal clearing model to our members.”
CLTX will process iron ore, coal, fertiliser and container trades.
CEO of CLTX Richard Baker said: “This project extends the collaboration between CLTX and LCH.Clearnet, bringing real value to our clients, who seek efficient and unencumbered integrated trading, broking and clearing solutions.”
“The classification of futures and our straight-through-processing (STP) link with LCH.Clearnet extends trading opportunities, removes risk and enables regulatory certainty for our global client base.”
Baltex COO, Paul Stuart-Smith, said: “As an FCA regulated platform, Baltex has a high level of regulatory compliance. Most of the major FFA brokers will be using Baltex on behalf of their clients and we are delighted to be working with LCH.Clearnet to provide an independent service which is of real value to the freight derivatives industry.”
