LCH RepoClear has record third quarter
11 October 2021 UK
Image: AdobeStock/surangaw
LCH’s RepoClear had a record quarter in Q3, clearing 2.8 million trades with an aggregate notional value of €62 trillion.
September was also a record month for the cash bond and repo clearing service, across its combined RepoClear Ltd and RepoClear SA business, with a total €22 trillion nominal cleared across over 1 million trade sides. Clearing of euro-denominated debt securities accounted for €18 trillion in nominal processed, with UK gilt clearing accounting for more than £3.3 trillion in nominal value.
LCH’s management team highlighted continuing efforts to expand the services of LCH SA, its Paris-based clearing arm, to buy-side clients, as well as extending the range of green bonds available for clearing.
SwapClear, LCH’s OTC interest rate swap clearing service, continued to deliver strong volumes, clearing US$202 trillion in notional value from 1.6 million trades over the quarter. This represented a 14 per cent year-on-year increase in cleared trade count from Q3 2020.
Client (end user) notional value rose 14 per cent YoY to US$50 trillion for the SwapClear service, which delivered US$134 trillion in trade compression across 1.1 million trades.
ForexClear also experienced growth in clearing volume, with US$5.5 trillion in notional from 840,000 trades representing a 21 per cent YoY in notional value.
The foreign exchange clearing service saw its client clearing franchise grow by 37 per cent YoY in Q3 to US$57 billion. September was a record month for client clearing, with client notional cleared value rising 79 per cent on September 2020 to US$28 billion.
CDSClear processed €430 billion in index and single name credit default swap (CDS) notional during Q3 2021. Options notional climbed 318 per cent to €37 billion YoY.
LCH indicates that CDSClear recorded a record 53 per cent quarterly share of European single name CDS cleared trades during Q3, a rise of 7 per cent since the first quarter.
Commenting on these results, LCH Group CEO and group head of post-trade for London Stock Exchange Group Daniel Macguire says: “LCH has continued its robust 2021 performance in Q3, with increased clearing activity from both new and existing customers. We are continuing to support our members and our clients in achieving efficiency while navigating regulatory change.
“The implementation of the latest phase of the uncleared margin rules in September served as a specific milestone for the derivatives market. As we enter Q4, attention is turning to the cessation of LIBOR at the end of the year and we remain committed to supporting the market in this reform and driving the migration to risk-free rates.”
The market watches closely to see how European clearing volumes play out in a post-Brexit environment.
The EU has granted temporary equivalence to UK-based clearing houses after Brexit, but this equivalent is scheduled to end in mid-2022.
Close to 90 per cent of euro-denominated IRS contracts by volume are currently cleared in London. However, the European Commission has stated that it considers clearing of euro-denominated contracts by clearing houses situated outside of the EU to represent a potential concern to financial stability.
September was also a record month for the cash bond and repo clearing service, across its combined RepoClear Ltd and RepoClear SA business, with a total €22 trillion nominal cleared across over 1 million trade sides. Clearing of euro-denominated debt securities accounted for €18 trillion in nominal processed, with UK gilt clearing accounting for more than £3.3 trillion in nominal value.
LCH’s management team highlighted continuing efforts to expand the services of LCH SA, its Paris-based clearing arm, to buy-side clients, as well as extending the range of green bonds available for clearing.
SwapClear, LCH’s OTC interest rate swap clearing service, continued to deliver strong volumes, clearing US$202 trillion in notional value from 1.6 million trades over the quarter. This represented a 14 per cent year-on-year increase in cleared trade count from Q3 2020.
Client (end user) notional value rose 14 per cent YoY to US$50 trillion for the SwapClear service, which delivered US$134 trillion in trade compression across 1.1 million trades.
ForexClear also experienced growth in clearing volume, with US$5.5 trillion in notional from 840,000 trades representing a 21 per cent YoY in notional value.
The foreign exchange clearing service saw its client clearing franchise grow by 37 per cent YoY in Q3 to US$57 billion. September was a record month for client clearing, with client notional cleared value rising 79 per cent on September 2020 to US$28 billion.
CDSClear processed €430 billion in index and single name credit default swap (CDS) notional during Q3 2021. Options notional climbed 318 per cent to €37 billion YoY.
LCH indicates that CDSClear recorded a record 53 per cent quarterly share of European single name CDS cleared trades during Q3, a rise of 7 per cent since the first quarter.
Commenting on these results, LCH Group CEO and group head of post-trade for London Stock Exchange Group Daniel Macguire says: “LCH has continued its robust 2021 performance in Q3, with increased clearing activity from both new and existing customers. We are continuing to support our members and our clients in achieving efficiency while navigating regulatory change.
“The implementation of the latest phase of the uncleared margin rules in September served as a specific milestone for the derivatives market. As we enter Q4, attention is turning to the cessation of LIBOR at the end of the year and we remain committed to supporting the market in this reform and driving the migration to risk-free rates.”
The market watches closely to see how European clearing volumes play out in a post-Brexit environment.
The EU has granted temporary equivalence to UK-based clearing houses after Brexit, but this equivalent is scheduled to end in mid-2022.
Close to 90 per cent of euro-denominated IRS contracts by volume are currently cleared in London. However, the European Commission has stated that it considers clearing of euro-denominated contracts by clearing houses situated outside of the EU to represent a potential concern to financial stability.
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