LCH.Clearnet Obtains OTC Clearing License in Japan

LCH.Clearnet Ltd, a worldwide Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term, has received formal approval in the form of a Clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term license from the Japanese Financial Services Agency (FSA), allowing the group to offer the clearing of non-yen OTC interest rate derivatives to Japanese financial institutions, according to an LCH.Clearnet statement.

The license is important for LCH.Clearnet as it effectively enables the clearing house process and clear non-yen OTC interest rate derivatives on behalf of Japanese banks via its SwapClear service. More broadly speaking, the new license also helps foster integration of the global Interest Rate Swap market into Japan through the group’s clearing infrastructural capabilities.

Moreover, the new license will allow banks utilizing LCH.Clearnet’s services to circumvent international subsidiaries, previously the only such way to access its SwapClear service. This will help banks directly assimilate and support this service suite however, ultimately facilitating more streamlined clearing for venues.

According to Suneel Bakhshi, Group CEO, LCH.Clearnet, in a recent statement on the license: “We are delighted that the FSA has awarded LCH.Clearnet a licence to clear interest rate derivatives in Japan. Tokyo is an important global financial centre and home to one of the largest OTC derivatives markets in the world. By providing our clearing service to Japanese financial institutions, we hope to strengthen further Tokyo’s position as a global player in derivatives.”

“We’ve seen significant demand for our services as firms seek to benefit from the efficiencies that come with clearing and associated services such as compression. We are fully committed to becoming integrated into the Japanese market and are proud to be the first overseas clearing house to be awarded a Japanese licence,” he added.

The reception of its latest license represents the second such instance at LCH.Clearnet in as many months. Earlier this year, the group achieved Clearing House Recognition from the Monetary Authority of Singapore (MAS), helping shore up LCH.Clearnet’s status in the region and more specifically domestically, with specific regard to the group’s EnClear, ForexClear, and SwapClear services.