Best Banks Awards: LCH
LCH takes the Best FX Clearing House crown at the 2018 FX Week Best Banks Awards
Paddy Boyle, global head of LCH’s ForexClear, is no stranger to attending industry conferences, but recently he has noticed a significant shift. When he got back to the firm’s stand after speaking on a panel, there was a long queue of people waiting to find out more about foreign exchange clearing. “This was a first for me,” he says.
The surging interest in clearing has other signs too. After launching in 2012, ForexClear saw little demand for its non-deliverable forwards (NDFs) clearing service until 2016, and volumes going through the platform have since exploded.
Now, more than half of NDFs traded in the interbank market are cleared through LCH, with volumes rising 60% year-on-year to reach $70 billion a day as the number of participants increases. While initially it was the largest banks that pioneered the process, smaller dealers are joining in.
Buy-siders are keen to explore their options, as the phased roll-out of the uncleared margin rules continues, leaving just 22 months until the September 2020 kick-off when asset managers come under the obligations.
“The conversations we are having are much broader, with hedge funds, asset managers, execution venues, prime brokers and middleware providers all getting engaged,” says Boyle. As a result, he forecasts that participation and volumes still have scope to go up.
I really believe that looking back on this, the market will see FX options clearing as a seismic turning point for FX
Paddy Boyle, LCH’s ForexClear
In July, LCH, which has been voted the Best FX Clearing House at the 2018 FX Week Best Banks Awards, launched the first clearing service for deliverable foreign exchange options, in partnership with CLS. The long-awaited options-clearing service has got off to a good start with more than $13 billion of volumes cleared with the participation of nine member firms.
“We expect sizeable pick-up in options clearing [over] the next few months,” says Boyle.
He forecasts that in 12 months’ time all large market participants will be involved in FX options clearing, which could pave the way towards clearing other deliverable derivatives such as forwards.
“I think this part of the market is going through a significant change. I really believe that looking back on this, the market will see FX options clearing as a seismic turning point for FX,” Boyle says.
Next up, LCH will focus on launching a compression service for FX, which users are asking for in a bid to manage their capital and margins more efficiently.
“Daily compression is already available and we are seeing enormous interest from our members,” adds Boyle. “I think this is also going to be a significant development for the industry.”
Interviews with the 2018 FX Week Best Banks Awards winners
Best Bank Overall for Foreign Exchange Dealing
Best Bank for FX for Banks
Best Bank for FX for Investors
Best Bank for Spot FX
Best Bank for FX Forwards
Best Bank for EUR/USD
Best Bank for USD/JPY
Best Bank for EUR/JPY
Best Bank for E-Trading
Best Bank for FX for Corporates
Best Bank for Currency Options
Best Bank for Structured Products
Best Bank for FX Prime Brokerage
Best Bank for FX in North America
Best Bank for Emerging European, Middle Eastern and African Currencies
Best Bank for FX Research and Strategy
Best Bank for FX in Asia-Pacific
Best Bank for Renminbi
Best Bank for Emerging Asian Currencies
Best Bank for FX in the Eurozone
Best Bank for Australian Dollar
Best Bank for GBP/USD
Best Bank for EUR/GBP
Best Bank for FX in London
Best Bank for Swiss Franc
Best Bank for FX Post-Trade Services
Best Professional e-Trading Venue
Best Vendor for Dealing Technology
Best Broker for Forward FX
Best Broker for Emerging Markets FX
Best FX Clearing House
Best Broker for Spot FX
Best Market Data Provider for FX
Best Bank for Scandinavian Currencies
Best Bank for South African Rand
Best Bank for African Currencies excluding ZAR
Best Bank for Canadian Dollar
Best Bank for Emerging Latin American Currencies
Best Vendor for Risk Management/Options Pricing Software
Best Prime-of-Prime House
BGC (no interview)
Best Broker for Currency Options
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