LCH.Clearnet is looking to draw buy-side firms to clear non-deliverable forwards (NDFs) by extending its client clearing offering to include European model account structures.
Four banks have signed up as clearing brokers to offer the service, which the central counterparty says will offer a variety of account structures providing end users with increased protection and asset segregation.
The clearing house is pushing the service out with the intention of capitalising on new margin requirements and other regulatory reforms increasing the cost of bilateral trading.
Regulators dealt a blow to the CCP earlier this year by announcing that NDFs would not be subject to mandatory clearing, however LCH.Clearnet is still maintaining the service, believing the buy-side will chose to clear FX trades.
“With the margin rules on non-centrally cleared derivatives being implemented from 2016 and Basel III shortly thereafter, the OTC derivatives market will continue to evolve,” said Gavin Wells, global head of ForexClear, LCH.Clearnet.
“In preparation for this firms that trade FX derivatives are looking for services that deliver capital efficiency. By clearing NDF trades, users benefit from improved counterparty risk management, increased capital efficiency through services such as multilateral netting, as well as simplified initial margin and variation margin exchange. We’re delighted to be working with four clearing brokers to offer ever greater efficiency and reduced operational complexity to the Foreign Exchange markets.”