LCH gains regulatory approval to clear FX NDFs in Japan

Japan’s FSA grants approval for LSEG’s LCH to clear FX non-deliverable forwards in the country.

The London Stock Exchange Group’s clearinghouse LCH has received approval to extend its clearing license in Japan.

Granted on 31 October by the Japan Financial Services Agency (FSA), the license extension means LCH’s ForexClear will be able to provide clearing for FX non-deliverable forwards (NDFs) on behalf of banks and clients in the country.

Japanese clients could only access LCH’s ForexClear via international subsidiaries prior to the approval. In 2016, the FSA also approved LCH to clear non-Yen over-the-counter (OTC) interest rate derivatives in Japan.  

“Tokyo is home to one of the world’s largest FX derivatives markets and we are honoured to have been awarded this licence to clear NDFs  in Japan,” said Katie Birchall, head of Asia Pacific at LCH. “This development is an important step for the market, providing Japanese firms access to LCH’s clearing services and global liquidity pool, reaffirming our long-term commitment to Japan.”

LCH hired Birchall in September this year to lead business operations, including its OTC derivatives clearing activity in Singapore and Tokyo, across the APAC region. She joined the clearinghouse from the National Bank of Australia where she was formerly head of portfolio optimisation and collateral.

More recently, LSEG upped its majority stake in LCH with an agreement to acquire a further 15.1% of the firm’s share capital, taking its ownership to more than 80%. LSEG said last month that it will pay up to £384 million for the increased stake.

Several major investment banks also sold part of their shares in LCH but remain minority shareholders, including Bank of America Merrill Lynch, Barclays, JP Morgan, Morgan Stanley and Societe Generale. At the same time, Commerzbank, Deutsche Bank, Nasdaq, Nomura, Borsa Istanbul and  CFT & Viel & Cie sold their entire stakes in the business.