Schroders has become the first European asset manager to clear through LCH ForexClear (ForexClear), with ForexClear member Citi serving as clearing broker. Non-deliverable forwards (NDFs) were cleared across Asian and South American currency pairs.
ForexClear provides risk management for foreign exchange (FX) NDFs, FX options, FX spot and FX swaps & FX forward outrights.
In Q3 2022, the company’s non-deliverable FX client clearing volumes increased 146 per cent year on year to USD $140 billion. Total notional was up 17 per cent from Q3 2021, with USD $19.1 trillion cleared.
James Pearson, head of ForexClear at LCH, says: “We welcome Schroders as the first European asset manager as it looks to benefit from the margin, capital, operational and credit efficiencies available through FX clearing. We look forward to partnering with Schroders and others in expanding our product offering.
“With Phase 6 of the Uncleared Margin Rules implemented from September 2022, ForexClear has seen a growing number of firms choose to clear their FX trades,” he adds.
Stephanie Whitford, global head of derivatives services at Schroders, comments: “Implementing ForexClear is an important step in increasing our central clearing capabilities for our global clients. ForexClear offers increased transparency, reduces counterparty risk and strengthens liquidity in the FX market. Schroders are delighted to be the first European asset manager utilising this service and will be looking to increase our client and clearing broker usage over the coming months.”
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