FXall Connects to LCH

LSEG’s Refinitiv FXall is building connectivity to its sister company LCH to enable clients to clear NDF trades – the connection is expected to be live in Q4 2021 subject to regulatory approval.

With the implementation of Phase 5 of the Uncleared Margin Rules (UMR) in September 2021, buy-side institutions are assessing how they will be affected and weighing the benefits of FX clearing. Refinitiv says institutions are evaluating the costs and operational challenges associated with these new margin requirements for uncleared trades and may instead elect to clear portions of their FX flow.

FXall clients will be able to determine which of their trades get cleared, for example based on the liquidity provider, currency pair, or account they are trading for. Trades will be routed to LCH via Settlement Center, FXall’s post-trade processing platform. In subsequent releases, Refinitiv says it will support cleared workflows for additional instrument types and Refinitiv venues, as well as with additional clearing houses.

“Both FXall and LCH share a commitment to the principle of open access and giving market participants a range of options for clearing and trading,” says Jill Sigelbaum, head of FXall. “This initiative brings together the services of two well-established brands that deliver on that commitment, while empowering institutions minimise counterparty credit risk and achieve capital efficiency opportunities.”

James Pearson, head of ForexClear, LCH, adds, “This initiative will expand the choice of trading venues available to buy-side firms that wish to access the risk management and efficiency benefits of clearing. The uncleared margin rules have sharpened the industry’s focus on initial margin and enhanced standards, and we look forward to working with FXall and the broader market to ensure widespread access to clearing.”