Anglo-French clearer LCH.Clearnet has applied for regulatory approval to extend its OTC interest rate clearing service to Australia.
The firm plans to lodge an application with the Australian Securities and Investment Commission for a clearing and settlement facility licence, which would authorise it to offer its SwapClear OTC interest rate swap clearing facility to Australian banks in a bid to expand its present client list of 70 international bank members.
LCH.Clearnet claims four of Australia’s five domestic banks have already voiced their intention to use the proposed service.
The move would bring competition to clearing in Australia, where trading competition in equities has existed since the launch of alternate venue Chi-X Australia in October 2011.
In other markets where it has been introduced, LCH.Clearnet asserts clearing competition has had a positive impact by bringing choice, transparency, liquidity growth, the introduction of new products and lower costs to end users without an increase in overall risk.
“By joining SwapClear, Australian banks will gain the liquidity and netting benefits that comes from access to a global service,” the firm said in a statement.
LCH.Clearnet’s SwapClear service currently clears A$3.9 trillion in Australian dollar-denominated swaps.
“LCH.Clearnet is excited by the possibilities of expanding in the Australian market and is very interested in continuing to pursue opportunities with Australia-based clients,” said Ian Axe, LCH.Clearnet Group CEO. “While all business plans are subject to regulatory approval, our discussions with the Australian regulators continue to be very positive, and we are planning to submit our application in the first quarter of next year.”
The firm’s ability to offer clearing for cash equities in Australia will depend on the outcome of the country’s Council of Financial Regulators work on competition in the clearing and settlement in this market.