LCH extends RepoClear to UK Gilts

LCH extends RepoClear to UK Gilts

London Clearing House has extended its RepoClear central counterparty service to UK Gilt cash and repo markets.

These additions take LCH RepoClear’s coverage of European government bond markets to eight including Germany, Belgium, Holland, Austria, Ireland, Finland and Portugal. LCH RepoClear clears business in excess of €2 trillion per month.

John Burke, director, LCH RepoClear, says: "There is wide expectation among Gilt market participants that the introduction of anonymous trading will lead to a dramatic improvement in the way Gilts are traded between banks in the UK. Consequently, a step-change in the operational efficiency of the Gilt market is expected."

Access to the market will be via electronic trading platforms and voice brokers.

A General Collateral (GC) basket for Gilts will be added in September to complement the LCH RepoClear Forward Start GC product launched in April.

The Gilt Design Committee represents market users and designed the blueprint for the cleared service. Mark Dearlove of Barclays Capital and chairman of the comittee says: "We welcome this new initiative as it will allow us to utilise our balance sheet more effectively, reduce settlement costs and risk, enabling Barclays Capital to trade on an anonymous basis."

Simon Tims, executive director of UBS Warburg’s repo desk, adds: "As a result of LCH clearing for European government bonds we have experienced fewer settlement problems and reduced our balance sheet and credit line exposures allowing the European repo market to grow substantially. We look forward to LCH central clearing giving the Gilt market a similar boost."

LCH is scheduled to launch a clearing service for Italian government bonds in Q4 of this year.

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