HKEX’s OTC Clear Granted Regulatory Approval in Japan

Hong Kong Exchanges and Clearing’s (HKEX) subsidiary, OTC Clearing Hong Kong (OTC Clear), has received approval to offer client clearing services to banks in Japan.

OTC Clear was set up in 2013 to provide OTC derivatives central clearing services. Profit & Loss reported last year that OTC Clear had identified FX as a growth area after cross currency swaps clearing volumes on the service rose 45% year-on-year and it handled its first deliverable FX swaps and forward contracts.

The clearing service has now received a license from the Financial Services Agency (FSA) of Japan to become a Foreign Financial Instruments Clearing Organisation, allowing it to offer clearing services to Japanese banks, which HKEX claims have shown strong demand in clearing cross currency swaps with OTC Clear.

“Japanese institutions play an important role in the OTC derivatives market, and this addition demonstrates our commitment to expand our fixed income and currency business offering in the region and internationally,” says Calvin Tai, HKEX co-president and COO. “This great milestone reflects further recognition of OTC Clear by international regulators.”

Apart from Japan, OTC Clear is also recognised by authorities in the US, European Union, and Australia to offer clearing services to their financial institutions.

Separately, Barclays has joined OTC Clear as its sixth European clearing member.

Tai adds: “We are pleased to have Barclays join OTC Clear as a direct clearing member, leveraging our unique clearing solutions in the offshore renminbi, or CNH. As a global market leader in the Asian time zone, we help connect mainland Chinese banks to the global markets.”

“We are delighted to be a direct clearing member of HKEX’s OTC Clear,” comments Kelvin Sze, Barclays’ head of macro trading, Hong Kong. “OTC Clear has been a significant industry development with its well-established network of members. As one of the founding shareholders, we are looking forward to facilitating greater access for our counterparties in the region with this additional clearing channel to meet their offshore renminbi needs.”

Galen Stops

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