24 February 2018
visit www.ebaday.com

LCH.Clearnet brings loss allocation to RepoClear

15 January 2013  |  1697 views  |  0 Source: LCH.Clearnet

LCH.Clearnet Ltd, the multi-national clearing house's UK-based CCP, has put in place best-in-class systemic risk mitigation for bonds and repo cleared through its RepoClear service by implementing formal loss allocation arrangements.

LCH.Clearnet Ltd's loss allocation arrangements, which are unique to the bond and repo market, were designed in close collaboration with leading fixed income market participants.

In the event of a RepoClear member default, where exceptional losses have been incurred in excess of the financial resources available, loss allocation ensures the ongoing operation of other LCH.Clearnet clearing services by introducing a further level of protection to the default waterfall.

The introduction of loss allocation is the latest example of LCH.Clearnet's commitment to delivering world-class risk management capabilities and to supporting the objectives of regulators globally to strengthen governance and corporate structures at CCPs to ensure financial stability. In addition, through a dedicated default management group, the arrangement formalises the close involvement and commitment of clearing members during any default management situation. In a default scenario, LCH.Clearnet Ltd would benefit from the expertise of senior trading representatives from clearing member firms working alongside LCH.Clearnet Ltd executives to liquidate open bond and repo positions.

John Burke, Head of LCH.Clearnet's Fixed Income business, said: "The changes we have made to the RepoClear default waterfall highlight our commitment to providing world-class risk management solutions to the markets that we clear. Our clearing members overwhelmingly supported this development, with 98% of voting clearing members in favour of the scheme. This confirms the importance of our RepoClear service's resilience and highlights LCH.Clearnet's position as the industry-leader for risk and default management methodologies."

The loss allocation arrangements follow changes introduced in August 2012 to separate the RepoClear default fund in London from LCH.Clearnet Ltd's cross-asset class mutualised default fund. Both initiatives have been approved by the Financial Services Authority.

Comments: (0)

Comment on this story (membership required)

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit https://www.capgemini.comVisit http://info.nice.comRegister for the webinar

Top topics

Most viewed Most shared
Ripple makes new connections to emerging marketsRipple makes new connections to emerging m...
11660 views comments | 16 tweets | 10 linkedin
hands typing furiouslySome Interesting Applications Of The Inter...
10287 views 3 | 9 tweets | 1 linkedin
Basel Committee outlines disruptive fintech scenariosBasel Committee outlines disruptive fintec...
8434 views comments | 15 tweets | 26 linkedin
Investment Association sets up fintech accelerator for asset managersInvestment Association sets up fintech acc...
7978 views comments | 19 tweets | 10 linkedin
R3 creates Legal Centre of Excellence for blockchain technolgyR3 creates Legal Centre of Excellence for...
7694 views comments | 10 tweets | 14 linkedin

Featured job

Basic c. EUR 90K OTE c. EUR 180K plus full bene...
Paris (preferred) or London

Find your next job