Brian Franz

State Street’s FX Trading Platform Integrates LCH Clearing Service

LCH has become the first clearing house to integrate with State Street’s FX trading platform that provides exception based automated matching, trade, and  settlement confirmation enrichment and third party messaging.

The platform, FX Connect TradeNeXus, will now provide its users with easy access to LCH’s clearing service, ForexClear, while retaining the familiarity and functionality of its existing bilateral services. Asset managers on FX Connect’s platform can now benefit from direct access to LCH’s clearing service for 5 G10 and 12 emerging market FX non-deliverable forwards (NDFs).

FX Connect TradeNeXus’ front-to-back FX ecosystem is designed to help market participants managing their bilateral and cleared trades through automated trade matching, trade, and settlement confirmation enrichment and messaging.

Standard Chartered Bank, State Street, AllianceBernstein LP, and Brandywine Global Investment Management are among the first firms to collaborate with ForexClear and TradeNeXus on the service.

Paddy Boyle, head of ForexClear at LCH, commented: “Connecting FX Connect TradeNeXus as a new trade source for ForexClear makes it easier than ever for asset managers to clear their FX derivatives portfolios. This new connection comes at an opportune time of increased demand for clearing services with most of the largest
asset managers becoming subject to uncleared margin rules this year or next.”

Gaetano DiMiceli, head of derivative operations and technology at AllianceBernstein LP, said: “Clearing offers us significant benefits in terms of counterparty risk
management, and enables us to have complete trade certainty. We’re pleased that TradeNeXus now offers routes to LCH on a platform we already have experience with so that our access to clearing has become even more efficient.”

Mark Solomon, director of client and trading Operations at Brandywine Global Investment Management, added: “We are excited to be at the forefront of this initiative, partnering with LCH and FX Connect TradeNeXus on the development of this new FX clearing workflow. The seamless integration between FX Connect and our order management system is simple to implement and will help improve efficiencies. We now can offer our clients an alternative FX execution method that provides significant benefits related to counterparty risk management and reducing initial margin requirements when trading bilaterally.”

Kate Lowe, managing director and global head of TradeNeXus, stated:  “Uncleared margin rules are changing the way the market looks at post-execution workflows. We’re seeing increasing demand for integration of a cleared settlement model as an extension of our existing settlement matching and messaging services. Our goal is to make this a seamless solution to ensure as little disruption as possible for our clients. FX Connect TradeNeXus is uniquely positioned to support our clients’ incorporation of FX clearing to their existing bilateral process. We are excited to work with LCH ForexClear and our buy- and sell-side partners in designing this front-to-back clearing solution.”

Last year, ForexClear launched deliverable FX options clearing, with early adopters including Barclays, Citi and J.P. Morgan. 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. The service 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.