Hong Kong Exchanges & Clearing (HKEX) becomes the latest major exchange group to identify FX clearing as a growth area, after announcing last week that its OTC Clear service handled its first deliverable FX swaps and forward contracts. The banks involved in the transaction – which was hailed by HKEX as “a step forward in […]
The Futures Industry Association (FIA) has released updated recommendations to improve clearinghouse risk management following recent market developments.
The developments in question are the placing of a member of Nasdaq Clearing’s Nordic market in default in September. The losses were sufficiently large to exceed the margin provided by the defaulter and the CCP’s own skin in the game and required the use of the commodities default fund. This was the first use of a default fund by a major CCP since a default on KRX, the South Korean exchange, in 2013.
CME Group has received regulatory clearance from the US Commodity Futures Trading Commission (CFTC) to start providing clearing services for OTC FX options.
The service will launch with dealer-to-dealer client clearing and is planned to be available in Q4. It will sit alongside CME’s suite of other FX cleared instruments, including listed FX futures and options, cash-settled forwards and NDFs.
Although FX is not currently mandated for clearing, Paul Houston, global head of FX products for CME, says the move is in-line with the group’s aim to provide cost-effective clearing solutions for market participants.
The Economic and Monetary Affairs Committee of the European Parliament today agreed that Kay Swinburne MEP, on behalf of the European Conservatives and Reformists (ECR) group, will continue to lead the Parliament’s negotiation team developing the legislation concerning CCP recovery and resolution.
Following the G20 agreement in 2010 to centrally clear derivative products, international work has continued as more focus has come upon central counterparties as a new point of systemic risk.
Commenting on the news, Swinburne says: “I am glad that my colleagues in the Parliament have confidence in my technical knowledge of the subject and are willing to put financial stability ahead of the politics on this important subject.
ForexClear, LCH Clearnet’s centrally cleared FX operation, reported record volumes in October, driven in large part by activity in Latin American currencies.
The CCP cleared $500 billion in notional in October, with over 20,000 trades cleared in just one week and almost 80,000 cleared during the entire month.
By contrast, in July less than 20,000 contracts with a notion value of less than $125 billion were cleared at the CCP.
ForexClear says that while an increase in Asia currency NDF volumes helped drive this growth, Latin American currencies saw and even greater increase in activity, with $64 billion of BRL fixing at the end of the month.
Tradebook FX (TBFX), Bloomberg’s FX ECN, has reached an agreement with Citi for the bank to serve as a central clearing counterparty (CCP) on the platform.
“We feel that the combination of Citi’s expertise in FX, and FXPB in particular, and market leading role in foreign exchange globally, coupled with the wide network of Bloomberg clients will be very synergistic,” says Tom Murphy, head of FX, futures and equity options sales at Bloomberg Tradebook. Citi will be the second CCP on TBFX
Sofiane Saidi is set to leave LCH Clearnet, where he currently works in NDF and FX options product development, according to market sources. Profit & Loss understands that although no official date has been set for Saidi’s departure from the firm, he has already agreed to take a position at a major investment bank in […]
Franck Mikulecz, managing director of the newly established clearing house FXCH, explains why and how his firm is using distributed ledger technology to clear spot FX transactions. Profit & Loss: You’ve launched a clearing house to clear spot FX using distributed ledger technology. Why? Franck Mikulecz: We think that in some respects, the FX market […]