LCH clears first ZARONIA swaps
12 September 2024 South Africa
Image: Arnald/stock.adobe.com
LCH SwapClear, a London Stock Exchange Group (LSEG) business, has cleared the first swaps referencing ZARONIA, a new risk-free rate for South African rand denominated swaps.
This new clearing capability demonstrates LCH鈥檚 commitment to supporting benchmark transition, and aligns with the objectives of the Market Practitioners Group (MPG), to direct orderly benchmark transition in ZAR Rates markets, the firm says.
Susi de Verdelon, group head of SwapClear and Listed Rates, LCH, says: 鈥淲e are delighted to extend our SwapClear service to include ZARONIA OIS and to become the first CCP to clear the product.
鈥淟CH is committed to supporting the South African market in its transition to ZARONIA and to contribute to the industry-wide efforts to ensure the adoption of new risk-free rates globally.鈥�
The counterparties to the first ZARONIA trades cleared through LCH SwapClear were ABSA Bank, Investec Bank, Nedbank, The Standard Bank of South Africa, and Rand Merchant Bank (RMB).
Deutsche Bank and J.P. Morgan facilitated the transaction as clearing brokers.
The South African Reserve Bank (SARB) started to publish ZARONIA in November 2022, following its identification by the MPG as the preferred successor to the Johannesburg Interbank Average Rate (JIBAR) in 2021.
Dr Rashad Cassim, deputy governor of the SARB and chairperson of the MPG, comments: 鈥淭his is a significant development for the South African derivatives markets, as demonstrated by the number of firms participating in this milestone.
鈥淭he clearing solution will be a key component in building liquidity in this new product with domestic and international participants, paving the way for a smooth transition to ZARONIA in line with our timetable.鈥�
The South African rand represented LCH SwapClear鈥檚 seventh largest currency in terms of registered notional in the past year, according to the firm, with ZAR 223 trillion (US$12 trillion) registered in 2023.
This new clearing capability demonstrates LCH鈥檚 commitment to supporting benchmark transition, and aligns with the objectives of the Market Practitioners Group (MPG), to direct orderly benchmark transition in ZAR Rates markets, the firm says.
Susi de Verdelon, group head of SwapClear and Listed Rates, LCH, says: 鈥淲e are delighted to extend our SwapClear service to include ZARONIA OIS and to become the first CCP to clear the product.
鈥淟CH is committed to supporting the South African market in its transition to ZARONIA and to contribute to the industry-wide efforts to ensure the adoption of new risk-free rates globally.鈥�
The counterparties to the first ZARONIA trades cleared through LCH SwapClear were ABSA Bank, Investec Bank, Nedbank, The Standard Bank of South Africa, and Rand Merchant Bank (RMB).
Deutsche Bank and J.P. Morgan facilitated the transaction as clearing brokers.
The South African Reserve Bank (SARB) started to publish ZARONIA in November 2022, following its identification by the MPG as the preferred successor to the Johannesburg Interbank Average Rate (JIBAR) in 2021.
Dr Rashad Cassim, deputy governor of the SARB and chairperson of the MPG, comments: 鈥淭his is a significant development for the South African derivatives markets, as demonstrated by the number of firms participating in this milestone.
鈥淭he clearing solution will be a key component in building liquidity in this new product with domestic and international participants, paving the way for a smooth transition to ZARONIA in line with our timetable.鈥�
The South African rand represented LCH SwapClear鈥檚 seventh largest currency in terms of registered notional in the past year, according to the firm, with ZAR 223 trillion (US$12 trillion) registered in 2023.
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