The Full Wiki

LCH.Clearnet: Wikis

Advertisements
  

Note: Many of our articles have direct quotes from sources you can cite, within the Wikipedia article! This article doesn't yet, but we're working on it! See more info or our list of citable articles.

Encyclopedia

From Wikipedia, the free encyclopedia

LCH.Clearnet
Headquarters London, United Kingdom
Industry Financial
Website www.lchclearnet.com

LCH.Clearnet is the leading independent clearing house, serving major international exchanges and platforms, as well as a range of OTC markets. It clears a broad range of asset classes including: securities, exchange traded derivatives, energy, freight, interbank interest rate swaps and euro and sterling denominated bonds and repos; and works closely with market participants and exchanges to identify and develop clearing services for new asset classes.

As a clearing house, LCH.Clearnet sits in the middle of a trade, assuming the counterparty risk involved when two parties (or members) trade. When the trade is registered with LCH.Clearnet, it becomes the legal counterparty to the trade, ensuring the financial performance; if one of the parties fails, LCH.Clearnet steps in. By assuming the counterparty risk, LCH.Clearnet underpins many important financial markets, facilitating trading and increasing confidence within the market.

Initial and variation margin (or collateral) is collected from LCH.Clearnet members; should they fail, this margin is used to fulfil their obligations. The amount of margin is decided by LCH.Clearnet’s highly experienced risk management teams, who assess a member’s positions and market risk on a daily basis. Both the soundness of the risk management approach and the resilience of its systems have been proven in recent times.

LCH.Clearnet is regulated or overseen by the national securities regulator and/or central bank in each jurisdiction from which it operates.

A global leader in clearing, LCH.Clearnet is the;

No. 1 in interest rate swaps

No. 2 in fixed income and repo

No. 3 in futures and options

References

http://www.lchclearnet.com/about_us/

Products

LCH.Clearnet clears a broad range of asset classes including: securities, exchange traded derivatives, energy, freight, interbank interest rate swaps[1] and euro and sterling denominated bonds and repos; and works closely with market participants and exchanges to identify and develop clearing services for new asset classes.

Interest Rate Swaps

SwapClear is the only truly global clearing service for over-the-counter (OTC) interest rate swaps – clearing more than 1.49 million interest rate swaps with a notional value of US$206 trillion, and over 60% of all inter-dealer swap volumes.1

Launched in 1999 by LCH.Clearnet, SwapClear initially cleared plain vanilla interest rate swaps in four major currencies. Today, it clears swaps in 14 currencies; USD, EUR, JPY and GBP out to 30 years and the remaining 10 currencies out to 10 years. It also clears OIS out to 2 years in USD, EUR, GBP and CHF. Over the last ten years, LCH.Clearnet has worked closely with market participants to build SwapClear into a leading and successful inter-dealer OTC clearing service providing a range of benefits to the inter-bank market.

SwapClear for Clients

Based on SwapClear’s successful clearing model, LCH.Clearnet has launched a Client Clearing Service. The new solution has added functionality to support the segregation of client portfolios and margin. The advent of SwapClear client clearing service means that, for the first time, the buy-side community has access to clearing for interest rate swaps.

LCH backs IRS between banks and their cusstomers

On December 15th 2009, LCH.Clearnet began guaranteeing trades between banks and their buy side clients in the $342 trillion interest-rate swaps market. Their SwapClear Client Clearing Service is the first to back trades between banks and hedge funds, asset managers & pension funds. Barclays Capital[2] and The Barnegat Fund were one of the first groups to clear interest-rate swaps via LCH.Clearnet on this initial day.

Cash Equities

LCH.Clearnet is the leading European equity central counterparty, providing clearing services to clients for equities, and equity equivalents such as exchange traded funds (ETFs), exchange traded commodities (ETCs) real estate investment trusts (REITS) and exchange traded bonds.

The EquityClear® service clears equity-based trades for LCH.Clearnet Ltd, that are executed on the London Stock Exchange (LSE)[3], SIX Swiss Exchange, Equiduct & PLUS Markets Group (PMG).

LCH.Clearnet SA clear transactions executed on NYSE Euronext[4], LSE DTS, Bourse de Luxembourg, Equiduct, SmartPool and SecFinex.

Commodities

LCH.Clearnet is the leading European central counterparty for clearing commodities, providing services to clients for agricultural, soft commodities, metals and plastics. LCH.Clearnet has been clearing commodities for over a century, since the London Clearing House was established in 1888.

LCH.Clearnet provides services to the following markets;

The London Metal Exchange (LME)

NYSE Liffe

Derivatives

LCH.Clearnet is one of the leading central counterparties for clearing derivatives, providing services to clients for Short term interest rates (STIRs) Indexes and Equity derivatives. LCH.Clearnet has been clearing derivatives since 1981.

Energy

LCH.Clearnet Ltd provides clearing services to clients for OTC Emissions and the Nodal Exchange.

LCH.Clearnet SA provides services for Bluenext Futures EUA, future contracts on European Union Allowances and Bluenext Futures CER, futures contracts on Certified Emission Reductions.

Fixed Income

LCH.Clearnet is a market leader in fixed income. LCH.Clearnet has been working with fixed income markets since 1998. Today, we are the second largest clearer of fixed income and repo products in the world.

These services enable participants to benefit from centralised risk management, balance sheet netting, settlement netting and operational efficiencies.

Our fixed income clearing product was the first to offer multi-market centralised and clearing netting facility of the European Government repo and cash bond markets. Fixed income currently clears over ten European markets and is complemented by the Sterling GC and €GC services for both cash and repo transactions.

Freight

LCH.Clearnet’s FreightClear* provides an independent clearing service for the registration of OTC Freight Forward Agreements (FFAs) for the most actively traded routes; eleven dry and eight wet routes, as well as options on the three main dry timecharter routes: Capesize, Panamax, and Supramax.

Globally based chartering companies, ship owners and trading companies are increasingly looking to manage their risk through cleared trading opportunities. By clearing through LCH.Clearnet, clients benefit from the stability and the implicit security of our default fund.

Brokers who are members of the FFABA have open and equal access to the service and can register their OTC brokered trades with LCH.Clearnet for clearing through a clearing member of LCH.Clearnet.

The service was launched in September 2005 with the support of the freight broking community. We are committed to working closely with the industry to ensure that our offering reflects the ongoing needs of the marketplace.

FreightClear is the Freight Division of the LCH.Clearnet EnClear OTC Service.

History

LCH.Clearnet has a long history of serving the financial markets. Originally established over 100 years ago, for the last 30 years we have been at the forefront of clearing in Europe.

2003 - LCH.Clearnet Group is formed following the merger of the London Clearing House and Clearnet SA

2004 - LCH.Clearnet begins to clear contracts for the EDX London market.

May 2004 - LCH.Clearnet begins to clear London Stock Exchange's Dutch Trading Service.

June 2004 - LCH.Clearnet acts as central counterparty and guarantor of full completion to the Powernext Futures market

2005 - Introduction of OTC Freight Clearing service

2006 - LCH.Clearnet offers its services as central counterparty to Alternext in Paris and Brussels, Broker Tec (Italian debt) and MTS Italy (French debt).

March 2007 - LCH.Clearnet and Euronext announce repurchase by LCH.Clearnet of shares held by Euronext to more closely align customer and shareholder interests

2008 - LCH.Clearnet begins OTC emissions clearing

2008 - LCH.Clearnet begins to clear contracts on the Luxembourg Stock Exchange


London Clearing House (LCH) History 1888 - LCH is established to clear commodities contracts in London.

1980 - Ownership of LCH passes to a consortium of six British Banks.

1981 - LCH begins to clear contracts for the International Petroleum Exchange (IPE)

1982 - LCH begins to clear contracts traded on LIFFE

1987 - LCH begins to clear contracts traded on the London Metal Exchange (LME)

1996 - Majority ownership of LCH transfers to the whole clearing membership, with the LME, IPE and LIFFE acquiring minority ownership

1996 - Introduction of clearing for cash equities

1997 - Introduction of clearing for Gas

1999 - Introduction of clearing for Swaps and Repos

1999 - Introduction of clearing for Power

2001 - LCH begins to clear the London Stock Exchange's automated order book trades

2002 - LCH begins to clear ICE energy contracts

2003 - LCH.Clearnet Group is formed following the merger of the London Clearing House and Clearnet SA

Clearnet History 1969 - Banque Centrale de Compensation SA is established to clear contracts traded in Paris commodity markets

1990 - Banque Centrale de Compensation SA becomes a subsidiary of Matif, and is the first organisation in Europe to clear both cash and derivatives

1998 - Bourse de Paris takes control of Matif. Clearnet launches a clearing service for French government securities and is the first organisation in Europe to permit remote clearing.

1999 - Restructuring of the French markets, all the regulated markets in Paris are run by a single body, the Société des Bourses Francaises, trading under the name of Euronext Paris. Clearnet is spun off as a subsidiary of Euronext and becomes the clearing house for all products traded in the Paris markets.

1999 - Introduction of clearing service for French government bonds

2000 - Euronext is established through the merger of Bourse de Paris, the Amsterdam Exchanges, and the Brussels Exchanges

2001 - Clearnet merges with Euronext Amsterdam's and Euronext Brussels' Clearing Houses.

2001 - Clearnet guarantees payment and financial security for Powernext, the French electricity market.

2002 - Clearnet launches clearing operations for transactions in Italian government bonds traded on the MTS Italy electronic platform.

2002 - Clearnet extends its guarantee to Same Day Repo active on French debt.

2003 - Euronext Lisbon contributes its derivative and OTC equity clearing businesses to Clearnet which thus acquires a branch in Portugal to establish a local presence with Portuguese clearing members.

2003 - LCH.Clearnet Group is formed following the merger of the London Clearing House and Clearnet SA

Advertisements

Advertisements






Got something to say? Make a comment.
Your name
Your email address
Message