CME and LCH bet on FX options clearing

CME’s cash-settled FX options-clearing solution will vie for dominance with LCH’s deliverable clearing product

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Ravi Pandit: deliverable FX options clearing is not a scaleable solution

Financial infrastructure providers CME Group and rival LCH are set to introduce clearing services for foreign exchange options this year, following years of delay, but the two firms have made radically different bets on the future path of the product.

While FX options clearing has been firmly in the crosshairs of post-crisis regulatory initiatives, progress has been thwarted by significant liquidity shortfalls at central clearing counterparties if these contracts are physically settled.

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