LCH.Clearnet is launching a buy-side clearing service of foreign exchange (FX) derivatives in Europe, expanding its ForexClear US client clearing model to include European model account structures.
End users trading non-deliverable forwards (NDF) will be able to connect to four clearing brokers including Societe Generale, HSBC and Standard Chartered Bank.
Firms in Europe will be able to access the benefits of NDF clearing, increasing risk management and capital efficiency.
Those buy-side firms and banks clearing NDF trades will be able to choose their clearing broker and preferred level of asset protection from a range of account structures, providing increased protection and asset segregation for users.
The initiative intends to improve ForexClear’s US client clearing model by merging with its legally separated operationally commingled (LSOC) account structure, which it launched in 2013.
Gavin Wells, global head of ForexClear at LCH.Clearnet, said: “With the margin rules on non-centrally cleared derivatives being implemented from 2016 and Basel III shortly thereafter, the OTC derivatives market will continue to evolve.”
“In preparation for this firms that trade FX derivatives are looking for services that deliver capital efficiency. By clearing NDF trades, users benefit from improved counterparty risk management, increased capital efficiency through services such as multilateral netting, as well as simplified initial margin and variation margin exchange.”
