LCH reports record swaps clearing activity

Clearing volumes for interest rate derivatives increased 25% over 2016, spurred by regulation and the migration to new cleared products.
By Joe Parsons
LCH announced it saw record clearing volumes in 2016, with over 3.8 million interest rate derivatives trades being processed by the world’s largest clearing house.

The cleared trades, representing over $665 trillion in notional over the course of the year, represented an annual increase of 25%.

LCH also stated buy-side clients of banks recorded $139 trillion in cleared notional at SwapClear, driven by new products such as inflation swaps and the impact of new regulations.

“Capital and balance sheet management continues to be a top priority for banks impacted by the Basel III capital requirements,” says Cameron Goh, global head of product management, rates and FX derivatives, LCH.

LCH’s compression services, which effectively wipes off the notional value of certain transactions by offsetting trades, also reached record levels in the year. In May it compressed over $1 quadrillion of cleared notional since the launch of the service in 2008.

“Central clearing and the use of compression remains an extremely effective method of driving down notional outstanding and line items in a portfolio, with the goal of maximising capital and operational efficiency,” adds Goh.

“Going forward, we will continue to work with our members to further expand the services available to them to bring more efficiencies to the market.”