LCH.Clearnet Limited's (LCH.Clearnet) market leading over-the-counter (OTC) interest rate swap (IRS) clearing service, SwapClear, has extended the range of currencies available for clearing. Interest rate swap trades denominated in Hungarian Forint (HUF), Czech Koruna (CZK) and Singaporean Dollars (SGD) out to 10 years can now be cleared.
Following the extension, 17 of the world's largest currencies with maturities of up to 50 years are available for clearing through SwapClear. The unique and extensive product scope the service offers enables over 95% of all eligible IRS trades to be cleared, fostering transparency and security in the OTC derivatives market. Broadening the offering is an important step ahead of the forthcoming regulatory changes; it brings greater efficiencies to the market and increases the adoption of centralised clearing in the OTC derivative marketplace.
Michael Davie, CEO, SwapClear said: "Extending the range of currencies, and thereby delivering increased choice to our clients, further demonstrates SwapClear's leadership, innovation and commitment to providing risk management services to financial market participants. At the forefront of OTC clearing for almost 12 years, we are committed to the continued development of the service, broadening its scope wherever possible and offering market leading clearing solutions to meet the growing demands of the OTC market."
Established more than 11 years ago, SwapClear is the only truly global clearing service for IRS. Since launch in 1999, it has cleared over 1.5 million OTC IRS trades. SwapClear currently has 56 clearing members. The 950,000 trades in SwapClear have an aggregate notional principal amount of over $295 trillion, with a further $41.5 trillion of cleared transactions removed through multilateral trade compression. It is the only OTC clearing service to have successfully handled a significant OTC default, when it resolved Lehman Brothers' $9 trillion IRS default in 2008. In that instance, SwapClear's default management process ensured that more than 66,000 trades in 5 currencies were hedged and auctioned to other clearing members. SwapClear's process resulted in no loss to any market participants.
In June 2010, following extensive industry consultation, LCH.Clearnet became the first derivatives clelearing house in the world to use overnight index swap (OIS) rate curves to discount IRS. This important step not only ensured the highest standards of risk management within a CCP; it has also increased certainty and transparency in the interest rate swap market more generally. This type of industry thought leadership was recognised by Risk Magazine in naming LCH.Clearnet 2011 Clearing House of the Year in its Risk Awards.