Industry NewsJuly 13, 2018

LCH Launches Deliverable FX Options Clearing

Paddy Boyle, Global Head of ForexClear at LCH
Paddy Boyle, Global Head of ForexClear at LCH

UK-based clearing company LCH has announced the launch of deliverable FX options clearing which is being rapidly picked up by the financial services industry, with early adopters including Barclays, Citi and J.P. Morgan. Further banks are expected to shortly start clearing the product.

Developed in collaboration with CLS, clearing FX Options is the first physical FX settlement service for cleared FX products and extends LCH’s ForexClear service, which clears approximately $70 billion in average daily volume.
Mike Lawrence, Citi’s Global Chief Administrative Officer for Foreign Exchange and Local Markets
Mike Lawrence, Citi’s Global Chief Administrative Officer for Foreign Exchange and Local Markets

Paddy Boyle, Global Head of ForexClear at LCH, said: “Clearing FX Options is an exciting milestone for LCH and the FX market. The launch of this service extends the benefits of clearing to more products and participants in the FX market, enabling them to benefit from the risk management, margin, capital and operational efficiencies of clearing. We’re delighted to partner with CLS to deliver this innovative new service.”

Alan Marquard, Chief Strategy and Development Officer at CLS
Alan Marquard, Chief Strategy and Development Officer at CLS

Alan Marquard, Chief Strategy and Development Officer of CLS, said: “This initiative marks a significant step forward for the global FX community. By working with LCH, we will reduce settlement and counterparty risk while improving efficiencies for those operating in the OTC cleared FX market.”

Andrew Batchelor, MD, Global FX Business Manager at Barclays, added: “The strong benefit of clearing deliverable FX Options has been apparent since the introduction of the uncleared margin rules in 2016. LCH has overcome enormous complexity in the development of the product through innovative thinking and strong partnerships with CLS and members. We are delighted to be a part of the launch of this groundbreaking solution for the broader market.”
Andrew Batchelor, MD, Global FX Business Manager
Andrew Batchelor, MD, Global FX Business Manager

Robin Wemyss, Global Head of FX Options Trading at J.P. Morgan, concluded: “Clearing deliverable FX Options and their hedges is a significant step for the market. We look forward to seeing the number of counterparts and the associated liquidity grow in the coming months.

Mike Lawrence, Citi’s Global Chief Administrative Officer for Foreign Exchange and Local Markets, added: “The launch of FX Options clearing capabilities unlocks significant new opportunities for market participants by enabling operational efficiency while optimizing risk management. We are pleased to work with LCH and CLS to extend the benefits of this initiative to our clients and look forward to seeing widespread market adoption of this new service.

ForexClear plans to add further FX products to its service in line with demand, but it is currently clearing FX Options on eight currency pairs: AUDUSD, EURUSD, GBPUSD, USDJPY, USDCHF, EURJPY, EURCHF, EURGBP with physical delivery, as well as spot and forward hedges.

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