LCH Clearing Volumes Hit New High
Posted by Colin Lambert. Last updated: January 18, 2022
Unsurprisingly perhaps, given the tightening margin rules and accelerated transition to risk-free rates, LSEG’s LCH has reported record clearing volumes during 2021, with new peaks seen across the board in different products.
The firm’s Forexclear service cleared a new record $21.7 trillion in notional FX, up 14% from 2020 and just over $100 billion per business day. Within that, $243 billion was cleared by clients, a 45% increase on 2020. Following the completion of the LSEG takeover of Refinitiv, ForexClear was integrated with FXall’s Settlement Center for NDF clearing. The service also went live earlier in 2021 with non-deliverable FX options clearing.
The headline act in the LCH stable remains, however, elsewhere, the transition to risk-free rates (RFRs) seeing SwapClear, LCH’s interest rates derivatives clearing service, convert over 350,000 legacy Ibor-linked contracts, representing a notional equivalent of over $35 trillion in the fourth quarter of 2021. Over the full year, SwapClear registered 6.8 million trades, up 7% from 2020 and its highest on record. Clearing of inflation swaps also reached record highs with $9 trillion of notional cleared across 322,639 trades, 37% and 39% increases on 2020, respectively.
LCH’s SwapAgent saw a massive 489% year-on-year increase with 10,186 trades processed, clearly a record for the service. In parallel with SwapClear, LCH says SwapAgent worked with market participants to facilitate the industry’s transition to RFRs “helping to support financial stability”.
Following the go-live of the RFR First initiative, 100% of USD/GBP swaps processed at SwapAgent were Sofr versus Sonia, 100% of USD/CHF swaps processed were Sofr versus Saron and 94% percent USD/EUR swaps processed were Sofr versus €Str.
Elsewhere, RepoClear processed €237.6 trillion of nominal across 10.5 million trades, both representing records for the service. In December, RepoClear at LCH SA went live with Sponsored Clearing, expanding access to the Paris-based service for the buy-side.
CDSClear saw 133% growth in iTraxx Options cleared at the service compared to 2020, with a record €163 billion of notional cleared in 2021. In European Single Names CDS, the service processed a record €210 billion, an increase of 40% on 2020. CDSClear also processed a record $42.5 billion of notional of US Indices CDS, an increase of 28% on 2020. Reinforcing its commitment to the US, CDSClear gained approval from the SEC to clear Single Names CDS and received authorisation from the CFTC to portfolio margin Index and Single Name CDS.
“Throughout 2021, LCH continued to provide the robust risk management, capital efficiencies and operational benefits that support our customers and help ensure financial stability,” says Daniel Macguire, group head, post-trade, LSEG; and CEO of LCH Group. “I’m particularly pleased by the growth at SwapAgent as LCH expands its offering to support customers in the non-cleared space. We also enabled a seamless transition to risk-free rates across five major currencies, effectively closing the door on non-USD Libor for cleared OTC swaps.”