Clearinghouse LCH has announced that it has expanded its deliverable FX offering to include FX forwards, meaning members of it ForexClear service are now able to clear this product in eight currency pairs, AUDUSD, EURUSD, GBPUSD, USDJPY, USDCHF, EURJPY, EURCHF and EURGBP, with physical delivery.
The product extension builds on the launch of deliverable FX options clearing in 2018, in line with customer demand and represents what LCH says is “a significant expansion” of the universe of FX derivatives now available for clearing.
The product incorporates the first physical FX settlement service for cleared FX products, which LCH developed in collaboration with CLS and the firm says it plans to add further FX products in line with demand and subject to regulatory approval.
“Making FX forwards available for clearing is a significant moment for the market,” says Paddy Boyle, head of ForexClear. “This initiative substantially broadens the proportion of the FX market which is able to be cleared. As a result, we’re pleased to be bringing the risk management and efficiency benefits of clearing to an even larger segment of the market.”
Tom Prickett, co-head of EMEA rates at JP Morgan, adds, “The launch of cleared FX forwards unlocks more opportunities for improved risk management and operational efficiencies. It’s always beneficial for the dealer community to have choice and today’s announcement is an exciting step for the advancement of the FX forward market.”