London Clearing House has won a Queen’s Award for Enterprise, in the Innovation category. The Award was made to LCH for the development, introduction and implementation of the SwapClearв service.
LCH says it has taken the central counter-party clearing (CCP) model, hitherto only applied to the exchange traded derivatives and cash equity markets in Europe, and led the way in offering its advantages to a much wider audience – and that SwapClear is the prime example of this, because it has secured a sizeable share of the OTC inter-bank interest rate swaps market.
“Applying this concept required LCH to work closely with members to resolve many issues – systems, risk management processes, standardisation and documentation, legal and regulatory, quite apart from demonstrating the credibility and effectiveness of a model promising what others had previously failed to deliver,” says LCH.
“But the results speak for themselves. Now with 19 members, including all the major market makers in the sector, LCH SwapClear is the only CCP service anywhere in the world for interbank interest rate swaps. It delivers its members reduced risk and capital requirements and operational savings, resulting in improved returns on capital. With the volume of swaps trades currently registered exceeding US$10 trillion, covering swaps in 12 currencies, with tenors up to 30 years, the SwapClear service is now a key element in the infrastructure of the international swaps market.”
David Hardy, Chief Executive of LCH adds: “Such awards are not often made to financial institutions and so I am thrilled that LCH has received this accolade. SwapClear is one of a number of LCH service innovations, and we can only hope that our other services might receive such recognition in the future.”