LCH.Clearnet Group, the largest clearer of bonds and repos in Europe, will launch clearing for Spanish government bonds and repos.
The first service will be launched on 9 August 2010 in response to significant market demand from both domestic and international banks. It will be operated by LCH.Clearnet Limited's (LCH.Clearnet) RepoClear service with trades settling at either Euroclear Bank or Clearstream Banking Luxembourg. In parallel, LCH.Clearnet SA is seeking to develop a complementary offering with a local settlement service.
For the first time, banks trading Spanish debt will be able to benefit from anonymous bond and repo trading, reduced counterparty risk and enhanced balance sheet netting. In line with RepoClear's commitment to customer choice, the service will be able to accept both electronic and voice brokered trades from multiple trading sources.
John Burke, director and head of fixed income, LCH.Clearnet said; "Demand for us to launch this service has been growing steadily and market participants are keen for us to extend the benefits of our multi-market clearing and settlement service to Spanish debt.
"Reduced counterparty risk, anonymity when trading and the significant efficiencies that balance sheet netting brings are just some of the benefits of this service. In time, clearing is also likely to contribute towards an increase in trading liquidity, as it has for other European government debt markets."
Spanish debt is already eligible as collateral in LCH.Clearnet's innovative RepoClear €GC service. The new Spanish clearing service will operate alongside a Spanish €GC Basket; thus allowing LCH.Clearnet to offer banks trading Spanish debt a standard settlement option or the opportunity to utilise tri-party settlement.
The LCH.Clearnet group clears an estimated 85%* of the cleared European government bond repo market. Q2 2010 volumes were up 37% on 2009, rising to an all time record of €35 trillion.
The Group is the largest clearer of bonds and repos in Europe, providing services across 10 government markets.
*ICMA's latest European repo market survey used for approximate market size comparisons.