LCH.Clearnet enhances SwapClear compression offering
15 October 2015 London
Image: Shutterstock
LCH.Clearnet has extended SwapClear’s blended-rate compression offering to enable members and their clients to compress forward rate agreements (FRAs).
The first blended-rate compression run for FRAs saw $1.9 trillion eliminated, according to LCH.Clearnet.
This latest enhancement to SwapClear’s compression offering has the potential to reduce notional outstanding of FRAs in SwapClear by up to 50 percent and number of trades outstanding by up to 70 percent.
As of this month, SwapClear had more than $66 trillion notional outstanding in FRAs, which are typically used to hedge interest rate risk around certain rate-reset dates.
Cameron Goh, head of clearing solutions for SwapClear product management at LCH.Clearnet, said: “Stringent capital requirements are driving banks to take a close look at their notional outstanding. FRAs make up a large portion of our members’ cleared interest rate derivatives so expanding our blended-rate compression offering will significantly reduce the notional outstanding in SwapClear.”
“The encouraging volumes we compressed in the first run for FRAs demonstrate the continued drive towards capital efficiency amongst our members and their clients.”
Market participants are now also able to compress variable notional swaps using SwapClear’s solo compression service.
The first blended-rate compression run for FRAs saw $1.9 trillion eliminated, according to LCH.Clearnet.
This latest enhancement to SwapClear’s compression offering has the potential to reduce notional outstanding of FRAs in SwapClear by up to 50 percent and number of trades outstanding by up to 70 percent.
As of this month, SwapClear had more than $66 trillion notional outstanding in FRAs, which are typically used to hedge interest rate risk around certain rate-reset dates.
Cameron Goh, head of clearing solutions for SwapClear product management at LCH.Clearnet, said: “Stringent capital requirements are driving banks to take a close look at their notional outstanding. FRAs make up a large portion of our members’ cleared interest rate derivatives so expanding our blended-rate compression offering will significantly reduce the notional outstanding in SwapClear.”
“The encouraging volumes we compressed in the first run for FRAs demonstrate the continued drive towards capital efficiency amongst our members and their clients.”
Market participants are now also able to compress variable notional swaps using SwapClear’s solo compression service.
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