LCH to bolster derivatives offering in 2017
02 November 2016 London
Image: Shutterstock
Global clearinghouse LCH is launching a new service for the non-cleared derivatives market in H1 2017.
The service, known as LCH SwapAgent, will provide clients improved standardisation, efficiency and simplicity in their bilateral derivatives transactions.
SwapAgent will act as an independent calculation agent, facilitating the calculation and exchange of bilateral margin and settlement payments, but will not become the central counterparty (CCP) to the trade.
According to LCH, its customer can benefit from CSA standardisation, end-to-end trade lifecycle management, independent valuation and risk calculation, dispute elimination, payment netting and compression.
LCH has confirmed that 11 dealers are already signed up to support the service, including Barclays, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and HSBC.
Nathan Ondyak, global head of LCH SwapAgent, said: 鈥淲e believe that an efficient bilateral market is critical to the functioning of the broader over-the-counter market. SwapAgent increases the efficiency of non-cleared derivatives trading by extending the centralised clearing infrastructure鈥搒tandardised document terms, trade processing, margining and payment processing鈥搘ithout requiring novation to a CCP or a change to the underlying trade terms.鈥�
Will Roberts, head of global rates trading at Bank of America Merrill Lynch, added: 鈥淒ue to the introduction of the bilateral margin rules the market is increasingly looking for ways to reduce the costs of bilateral trading. Using LCH SwapAgent provides an opportunity to simplify our bilateral post-trade processes and meet the emerging obligations in a more efficient manner.鈥�
The service, known as LCH SwapAgent, will provide clients improved standardisation, efficiency and simplicity in their bilateral derivatives transactions.
SwapAgent will act as an independent calculation agent, facilitating the calculation and exchange of bilateral margin and settlement payments, but will not become the central counterparty (CCP) to the trade.
According to LCH, its customer can benefit from CSA standardisation, end-to-end trade lifecycle management, independent valuation and risk calculation, dispute elimination, payment netting and compression.
LCH has confirmed that 11 dealers are already signed up to support the service, including Barclays, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and HSBC.
Nathan Ondyak, global head of LCH SwapAgent, said: 鈥淲e believe that an efficient bilateral market is critical to the functioning of the broader over-the-counter market. SwapAgent increases the efficiency of non-cleared derivatives trading by extending the centralised clearing infrastructure鈥搒tandardised document terms, trade processing, margining and payment processing鈥搘ithout requiring novation to a CCP or a change to the underlying trade terms.鈥�
Will Roberts, head of global rates trading at Bank of America Merrill Lynch, added: 鈥淒ue to the introduction of the bilateral margin rules the market is increasingly looking for ways to reduce the costs of bilateral trading. Using LCH SwapAgent provides an opportunity to simplify our bilateral post-trade processes and meet the emerging obligations in a more efficient manner.鈥�
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