The annual Leaders in Trading gala is the most distinguished awards night for the trading community. Among the most coveted awards categories is the Editors’ Choice Awards and today we bring you the 2023 nominees for Outstanding Post-Trade Services Provider.
The post-trade landscape is constantly evolving, bolstered by technological advancements and regulatory change – particularly in light of Basel 4 and the ongoing Brexit deliberations in the UK and Europe.
With its complete view of the market, The TRADE has named Cboe Clear Europe, Eurex, Euronext Clearing and LSEG’s LCH as the most impressive players in this space thanks to their recent achievements and developments.
Cboe Clear Europe
Cboe rebranded its clearing house EuroCCP to Cboe Clear Europe late last year, having acquired it two years prior. Since then, the post-trade offering has seen various developments as it continues to enhance its services, focused on growing its European markets, embracing innovation and supporting its clients’ strategies. The pan-European central counterparty (CCP) has approval to clear cash equities, depositary receipts, ETFs, and equity derivatives (index futures and options). Claiming to be one of the most-connected CCPs in Europe, it offers its services to 48 trading venues, with plans to continue to grow this further. Its overall market share for cash equities clearing was 34% in the first half of 2023, an year-on-year increase from 2022.
In January, Amsterdam-based Cboe Clear Europe became the first non-UK CCP to receive permanent recognition from the Bank of England (BoE). Subsequently, Swiss authorities also authorised Cboe Clear Europe as a recognised CCP in March. Following this, in June, Cboe Clear Europe unveiled an initiative to introduce clearing, settlement and post-trade lifecycle management for SFT transactions in European cash equities and ETFs by Q3 2024. Subject to regulatory approvals, the service will come through its Amsterdam-based clearing house and introduce matching, CCP clearing, settlement and post-trade lifecycle management for SFT transactions in European cash equities and ETFs, and settlement will take place in 19 European Central Securities Depositories (CSDs). The move secured the support of a broad range of key market participants, including banks, clearing firms, asset managers and custodians, including the likes of BNY Mellon, Citi and Goldman Sachs.
Cboe Clear Europe is an independent subsidiary of the Cboe group, operating with its own governance structure and management team – bolstered through the appointment of Vikesh Patel as President in December 2022. He replaced Cécile Nagel, who stepped down from the role in September.
Eurex
Eurex, part of Deutsche Börse Group, has made many high-profile developments over the last year, working to grow its post-trade offering through partnerships and launches. In November last year, it launched a new incentive program aimed at encouraging more euro clearing volumes to the European Union post-Brexit. Through offering an incentive reward of up to 50,000 euros, could qualify when starting the clearing of OTC interest rate swaps (IRS), overnight index swaps (OIS), basis swaps and/or zero-coupon inflation swaps (ZCIS) at Eurex Clearing. Clients running active accounts in the EU could apply from March of this year with the clearinghouse confirming that the move was aimed at reducing reliance on CCPs outside of the EU in line with regulatory objectives. The same month, it expanded its interest rate segment with the launch of three-month Euro STR futures referencing €STR, allowing allow Eurex to offer a listed, centrally cleared and cash-settled solution for trading or hedging the new risk-free rate.
Eurex’s offering allows clients to trade repos with more than 160 registered participants and allows participants to raise or place cash against over 13,000 securities, both domestic and international. The business reached record volumes in its cleared repo markets – doubling across all markets year on year as of September this year. Eurex onboarded State Street in May of this year, becoming the first clearing house outside of the US to trade and centrally clear repo transactions with the move allowing State Street clients to benefit from multilateral netting providing risk management and collateral optimisation. Following this, BNY Mellon selected Eurex as the first clearing house to centrally clear repo trades in Europe. The same month, Goldman Sachs joined exchange Eurex’s listed FX futures business as a trading and clearing member – a “major milestone” in its ambition to become a listed FX liquidity hub in Europe.
In April, Eurex Clearing announced the planned launch its new ESG Clearing Compass, aiming to support the sustainable transformation journey of clearing members and their clients by increasing transparency and awareness regarding cleared portfolios and counterparties. More recently, in June, Eurex incorporated STIR derivatives into its partnership programme, with the aim of establishing an EU-based viable alternative liquidity pool for trading and clearing EURIBOR Futures and Options. Eurex at the time stated that its goal is to “enhance its cross-product efficiencies while also supporting the European systemic stability and strategic autonomy agenda”.
Euronext Clearing
Multi-asset clearing house, Euronext Clearing – formerly CC&G as part of Borsa Italiana – offers risk management on 14 markets and seven countries, covering equities, ETFs, closed-end funds, financial and commodity derivatives, bonds and repos. The year to date represented a key stage of the business’ growth strategy, working to deliver one CCP for all of Euronext’s cash equity, financial and commodity derivatives markets across Europe. The clearing migrations for equities and derivatives clearing are scheduled respectively for end of 2023 and Q3 2024, set to provide harmonised trading, clearing and settlement infrastructure for its members. In January of this year, the exchange negotiated the early termination of its derivatives clearing agreement with LSEG clearing house LCH SA.
In June 2022, Euronext and LCH RepoClear concurrently launched Value at Risk (VaR) methodologies across the respective debt markets they clear, across fixed income, equity and equity derivatives. Euronext’s VaR-based margin methodology focuses on Italian, Portuguese, Spanish, and Irish government bonds. The move comes as part of the ongoing evolution of Euronext Clearing Risk Management systems and will replace the MVP SPAN-like margin methodology which is currently applied to all bond instruments. The new VaR framework on equity and derivatives, expected this quarter, is part of the European expansion of Euronext Clearing and the firm’s “Growth for Impact 2024” strategic plan. Upon the completion of the migration programme, Euronext Clearing claims to be be Europe’s third-largest CCP.
Over the last three years, Euronext has made continued investment in its clearing business, with 50 new hires as it worked towards its target of 65% headcount growth of Euronext Clearing between 2021 and 2023. The hires have been made across its risk, technology, sales and product development functions. In May, Euronext appointed Roberto Pecora as chief executive officer and general manager of Euronext Clearing, effective from July.
LCH
LCH – an LSEG post-trade business – has seen a swathe of new developments over recent months as it continues to enhance its business on a global scale. It offers its clearing service and risk management offering across a range of asset classes, including: OTC and listed interest rates, fixed income, FX, CDS, equities and commodities. In the last year, LCH has seen significant growth across its services, including LCH CDSClear which saw a 31% increase versus H1 2022, LCH SwapClear – up 13%; LCH RepoClear with an increase of 12% year on year, and LCH CommodityClear which saw a 9% increase.
The business has been enhanced through various acquisitions and partnerships. In April, LCH entered into a strategic partnership with digital assets trading venue, GFO-X, to launch the UK’s first centrally cleared trading venue for derivatives in this space – scheduled to launch in Q4. Additionally, last year’s acquisition of portfolio optimisation services provider Quantile added important multi-lateral netting capabilities to LSEG’s post-trade division, working to maximise efficiency and better manage risk, capital and funding requirements through Quantile’s multilateral optimisation services. Following this, the completion of the Acadia acquisition in March 2023 further enhanced the offering across multiple asset classes, with Acadia providing risk management, margining and collateral services for the uncleared derivatives markets. Another key milestone came in July, as LCH merged its RepoClear Euro debt service, which includes specials and general collateral, with its tri-party basket repo clearing service €GCPlus, unlocking additional netting opportunities for members.
Most recently, in October , UOB (United Overseas Bank) joined both LCH SwapClear and LCH ForexClear as a direct clearing member, the first Southeast Asian bank to join ForexClear, the last Singapore local banking group to join SwapClear, and the first member globally to join both simultaneously. Earlier in the year Barclays, Barclays Ireland and Goldman became clearing brokers at LCH’s CDSClear, demonstrating the continuing growth of the business, while Standard Chartered and IndusInd Bank partnered to clear its first NDF non-deliverable forward (NDF) client transaction at LCH ForexClear. In August, Corentine Poilvet-Clédière was appointed chief executive of Paris-based European central counterparty LCH SA, assuming the role on 1 October, replacing Christophe Hémon.