LCH.Clearnet has welcomed ISDA’s current strategic focus on straight through processing in the OTC swaps market and its acknowledgement of the benefits of clearing in reducing credit and operational risk. LCH.Clearnet says it is the only central counterparty in the world providing clearing, through its SwapClear service, to the wholesale inter-bank interest rate swaps market. “As SwapClear members improve their messaging automation some are achieving efficiency statistics in excess of 90% of trades matched, confirmed and cleared within one day,” says an LCH.Clearnet spokesman.
LCH.Clearnet holds monthly member steering group meetings provide transparent reporting of efficiency metrics and a forum to consider initiatives that facilitate industry best practice. “We are very pleased with the STP benefits we have achieved as a result of centralised automation in clearing. We have focused a lot of energy as a group of banks on reducing confirmation and matching times and the result has been a significant reduction in operational risks” says Joe Reilly, Head of Derivative Operations at Barclays Capital. “The netting process significantly reduces our settlement activity for vanilla OTC trades,” he added.
In 2003, LCH.Clearnet’s SwapClear service added a further 7 currencies so that it now clears In 2003 LCH.Cleranet added trades in Euro, Yen, Sterling and US Dollars to a maximum maturity of 30 years and CHF, AUD, DKK, CAD, SEK to a maximum maturity of 10 years; and HKD, NOK AND NZD to a maximum maturity of 5 years.
The maturity boundaries set by LCH.Clearnet in conjunction with SwapClear members reflect market trading liquidity, and as a result the SwapClear service has now cleared approaching $30 trillion of interest rate swaps. In addition to its SwapClear service, LCH.Clearnet also provides CCP services for trades in OTC energy and equity derivatives