Clearing house LCH has announced record volumes across multiple clearing services in 2017, with FX leading the way, registering the greatest pace of growth across established products.
The firm says its equities, fixed income, and OTC derivatives clearing services all surpassed previous years’ clearing activity, with growth driven by the roll-out of new products, effects of regulatory change and the onboarding of new customers across the world.
LCH’s FX derivatives clearing service, ForexClear, delivered very strong growth in 2017, as members and their clients directed increasing emerging market NDF volumes into clearing to achieve greater efficiencies. In 12 months, ForexClear multipled volumes by almost three and a half times, processing over $11 trillion in notional, up from approximately $3.2 trillion in 2016.
Further growth is expected in 2018 following ForexClear’s launch of G10 NDFs in Q4 2017.
LCH’s interest rate derivatives clearing service, SwapClear, processed over $873 trillion in notional, a 31% increase compared with 2016. The increase was driven by “significant” onboarding of new clients across Europe, the Americas and Asia Pacific, LCH says.
Elsewhere, LCH says it cleared over $3.1 trillion in inflation swaps, almost three times the previous year’s volume, €175 trillion through RepoClear – a 25% increase – and €1.1 trillion in notional across its CDSClear platform.
Compression volumes also continued to rise, with over $608 trillion compressed over the year, up 58% on levels from 2016.
“2017 has been another strong year for LCH across all our business areas,” says Daniel Maguire, group CEO, LCH. “We’ve seen significant growth in volumes across multiple asset classes driven by new customers as well as additional flow from existing customers.
“The Group is committed to its Open Access approach, working in partnership with our customers to promote greater choice and innovation, reducing risk and maximising capital and operational efficiencies,” he adds. “In 2018, we look forward to continuing to partner with our customers, as we look to add additional products and services to our existing wide range spanning the cleared and increasingly the non-cleared market.”
In September 2017, LCH SwapAgent, a service for the non-cleared derivatives market, processed its first trades. 14 banks have confirmed their support for the service, which has also gone live with cross-currency basis swaps, and is planning to launch a swaptions offering in 2018.
In 2018, LCH says it will further expand its SwapClear product offering, with plans to introduce non deliverable interest rate swaps in Chinese yuan, Korean won, and Indian rupee, subject to regulatory approval.
The firm is also planning to extend its portfolio margining solution, LCH Spider to allow long term interest rate futures to be offset with eligible swaps. The clearing of FX options at LCH is also due to launch in 2018, subject to regulatory approval.