Wednesday November 22 2023
News Source: Global Exchanges
Focus: Clearing & Settlement
Type: General
Country: UK
On 21st November 2023, LCH ForexClear and Quantile announced that they have delivered the market’s first FX Smart Clearing service. The service, which went live on 15th November, enables participants to selectively clear FX Forwards via LCH ForexClear to significantly reduce capital requirements and counterparty risk.
It works by intelligently selecting existing uncleared trades to move to LCH ForexClear, and optimising portfolios with new rebalancing trades to reduce counterparty risk and the financial resources a participant must hold. The optimisation can be fully customised, enabling participants to control their risk and resource changes, as well as their preferred currency pairs and trading partners. Portfolios can also be potentially compressed to significantly reduce trade count and notional.
By moving FX Forwards into LCH ForexClear, participants benefit from multilateral netting, lower counterparty risk weights and settled to market (STM) treatment – all of which reduce capital requirements and counterparty risk. Quantile’s optimisation then ensures the risk reduction is achieved within the relevant initial margin (IM) and risk constraints.
Click on the above link for further information
