LCH.Clearnet OK to extend interest rate swap (IRS) clearing to Australian Banks

2 July 2013

LCH.Clearnet has had its clearing and settlement facility licence extended by the Australian government so that it can offer the country’s banks its SwapClear over-the-counter (OTC) interest rate swap (IRS) clearing service directly to Australian banks.

As members of SwapClear, Australian banks can now participate alongside international clearing members of the London headquartered clearing house, enabling them to better mitigate global counterparty risk and realise greater portfolio netting efficiencies.

International banks operating in Australia are already actively clearing IRS via SwapClear and the licence will merely allow Australian banks to join them as direct clearing members, subject to UK regulatory approval.

SwapClear claims to handle over 90% of the globally cleared IRS market and is a major provider of clearing for Australian dollar interest rate swaps. The SwapClear members and clients benefit from access to a broad range of OTC derivatives products and services in a huge number of currencies, via the central counterparty (CCP).

LCH.Clearnet was taken over by the London Stock Exchange (LSE) Group earlier in the year and has big expansion plans. In May 2013, the CCP appointed Jack Drewe to serve as its local representative based in Sydney, Australia. Drewe will lead the build-out of the office and SwapClear’s offering in Australia.

“We are delighted to have received approval to offer our OTC IRS SwapClear clearing service in Australia,” said Michael Davie, chief executive officer (CEO) of LCH.Clearnet’s SwapClear business. “This is an important milestone for LCH.Clearnet’s long-term growth strategy in the region, and we are looking forward to working with our new members and local partners to bring greater efficiency and transparency to the Australian market.”

Eddie Listorti, co- head of fixed income, currencies and commodities (FICC), ANZ Global Markets, welcomed the move down under, saying: “ANZ welcomes the government's decision to license LCH.Clearnet’s SwapClear business to offer clearing services for interest rate swaps in Australia. “We see this as an important step for Australian financial institutions providing OTC derivatives products for their customers. We look forward to becoming a direct member of LCH.Clearnet as one of the key entities for clearing our global interest rate swaps business.”

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