Barclays expands client clearing in Asia with Japan deal

The Japan Securities Clearing Corporation granted Barclays clearing authorisation in November as it looks to expand its clearing business and presence in Asia. 

UK investment bank Barclays will clear its JPY swaps trades through the Japan Securities Clearing Corporation (JSCC) after being granted authorisation to operate as a client clearer in November, The TRADE understands.

The move means that Barclays’ European and Asian client base have access to the largest liquidity pool for JPY interest rate swaps. Barclays is one of three international clearers now authorised on JSCC, alongside Morgan Stanley and Citi.

Speaking to The TRADE, Bradley Fraser, head of agency derivatives services (ADS) clearing for Asia Pacific at Barclays, said that the decision to join JSCC is part of the bank’s strategy to invest in its clearing business and the Asia Pacific region. 

“With the push towards mandatory clearing in CCPs and then the drive around uncleared swap margins, we’ve had to stay close and relevant to our clients to help them understand how the rules will impact them,” Fraser said. “Through that process, we have evolved our clearing offering and clients began asking questions about JSCC given its market share in cleared yen swaps.”

Morgan Stanley and Citi currently use their branches in Tokyo to clear, but Barclays said it uses its London entity in order to onboard clients more efficiently. The bank also has a global netting agreement (GNA) in place to cross exposures for clients across different products under one agreement. 

“It’s easier for clients to document with entities they are familiar with, and our portfolio margin product (Global Netting, or ‘GNA’) is definitely a competitive advantage for us,” Fraser added. “There is a sense that clients, particularly global clients and hedge funds that have desks in Asia Pacific, are keen to know that we are investing in the region because they want access to the markets here.”

In the US, the Commodity Futures Trading Commission (CFTC) is revaluating its rules on equivalence meaning clients based in the US could also soon gain access to JSCC. Barclays added it is keeping a watchful eye on this development as it could prove to be an opportunity to extend clearing support to its US clients.