LCH Adds Euro Repo to Sponsored Clearing Model

LCH has expanded its Sponsored Clearing model to include Euro repo clearing, thus enabling buy-side firms to directly access repo clearing at LCH SA, including €GCPlus.

Members of the firm’s RepoClear will gain access to the service’s deep netting pool, as well as achieving price and settlement efficiencies.

Based on open access and developed to provide participants with a choice of trading venues and settlement options, LCH’s Sponsored Clearing model will count on Tradeweb as the first trading venue to offer access to the Sponsored Clearing service at LCH SA.

Buy-side firms such as pension funds and insurance firms are now able to access LCH SA’s RepoClear, which caters to buy-side firms. The service is accessed via a sponsorship model, whereby an agent bank provides support to the sponsored member.

The service includes facilitating margin payments and providing default fund contributions for transactions made by the sponsored member. The move builds on the model offering access to LCH Ltd, which launched in 2017.

Corentine Poilvet-Clediere, Head of RepoClear, Collateral and Liquidity, LCH SA, said: “The rollout of our successful Sponsored Clearing model to LCH SA is a significant moment for the European fixed income market. We are delighted to extend the benefits of clearing to an even broader set of market participants. We are looking forward to continuing to support our customers in achieving balance sheet efficiencies through netting, while significantly reducing counterparty and operational risk.”

Nicky Parsons, Head of Product – Fixed Income Prime Brokerage EMEA, Societe Generale, said: “We are very pleased to confirm our support as an agent bank for this initiative. This model will enable us to offer an even broader clearing solution for our clients, who are now able to access LCH-cleared euro government bonds. This is also a positive risk management move: diversifying the members of the CCP and increasing the capacity of the repo market, more generally.”

Enrico Bruni, Head of Europe & Asia Business, Tradeweb, said: “We are delighted to connect to LCH SA to offer our buy-side customers access to the large pool of cleared repo liquidity at RepoClear. This is an exciting milestone for the market and we are proud to be the first trading venue to provide access to this service, further enhancing our clients’ workflows.”

LCH has recently appointed James Pearson as Head of ForexClear, the FX derivatives clearing service. He will oversee its continued growth from the London office and reporting to Isabelle Girolami, CEO, LCH Ltd.

ForexClear has reported $19.1 trillion cleared across the service in 2020. In January 2021, the business went live clearing Non-Deliverable Options, a complementary product to its existing offering of non-deliverable FX forwards, deliverable FX options and deliverable FX forwards.

In July, LCH appointed Rohit Verma as Head of Asia Pacific, based in Singapore and reporting to Isabelle Girolami, Chief Executive Officer at LCH Ltd.