As a result of the Australian government extending to its clearing and settlement facility licence, LCH.Clearnet has been given the nod to provide its OTC interest rate swap clearing service to Australian banks.
Previously, the service, known as SwapClear, was only available to international banks operating in Australia. Australian banks can now participate as direct clearing members, subject to UK regulatory approval. LCH.Clearnet is majority owned by the London Stock Exchange Group.
The firm says that it currently clears over 90% of the global cleared interest rate swap market and is a leading provider of clearing for Australian dollar interest rate swaps. It claims access to the broadest range of OTC derivatives products and services in the broadest number of currencies offered by any central counterparty.
In May 2013, LCH.Clearnet named Jack Drewe as their local representative based in Sydney. He is responsible for building the office and promoting their product in Australia.
LCH. Clearnet was told at the beginning of the year that it would not receive permission to clear equities for the time being. However, earlier this summer, the firm was granted a licence by the Australian Securities and Investments Commission (ASIC) to clear instruments traded on the FEX Futures Exchange, which is slated to launch this year.
The new exchange will not compete in instruments listed on the Australian’s Stock Exchange’s derivatives venue ASX 24, but it has been suggested that by offering approximately similar products, it could generate liquidity and bring down trading costs.