NO 230 – APRIL 2012
Reform and innovation in Chinese capital markets

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WFE Focus January 2012
Post trade

Clearstream to accept funds as collateral
Clearstream has added investment funds to its portfolio of asset classes for collateral, and wishes to promote the use of funds as collateral. At the moment, Clearstream is the only provider to offer a standardized and automated service which leverages investment funds to secure collateralized transactions such as money market transactions, securities lending, OTC derivatives, credit line guarantees.

Clearstream to join Hong Kong Exchanges global post trade services
Clearstream will join the Hong Kong Exchanges and Clearing’s Ecosystem initiative as a founding member. The Ecosystem is an innovative approach to data management services that is designed to provide eligible participants from across the spectrum of financial and securities markets with access to HKEx market data, trading and clearing systems. Via this single connectivity hub, Ecosystem participants will also be able to connect more efficiently with each other within a secure and monitored environment. Customers of Clearstream that are also participants at the HKEx will benefit from improved connectivity to the Clearstream systems once the Ecosystem goes live in the fourth quarter of 2012.

IntercontinentalExchange to launch OTC FX clearing service
IntercontinentalExchange expanded its clearing services to include OTC Non-Deliverable Forward Foreign Exchange contracts. The new service is planned to be launched in the second quarter of 2012, subject to regulatory approvals, and will initially clear non-deliverable forward contracts in Brazilian Real, Korean Won, Chinese Yuan, Indian Rupee, Indonesian Rupiah, Chilean Peso and Russian Ruble. All of these contracts will be settled in US dollars.

IntercontinentalExchange to launch new swaps credit risk management workflow
IntercontinentalExchange will introduce an innovative execution-to-clearing workflow for OTC swaps that supports credit risk management. Known as “Plus One,” this pre-clearing credit check workflow will be used for all ICE OTC clearing including its market-leading credit default swap and energy swap clearing business. Building on ICE’s proven technological solutions, Plus One is expected to commence production testing in the second quarter of 2012.

LCH.Clearnet launches OTC FX clearing
On 19 March 2012, LCH.Clearnet began clearing foreign exchange. This new service, called ForexClear, provides clearing for FX Non Deliverable Forwards (NDFs) and was designed in close collaboration with LCH.Clearnet members. NDFs are cash settled products, actively traded in a range of high growth economy currencies. From launch, the service will clear NDFs in the following currencies: Brazilian Real, Chilean Peso, Chinese Yuan, Indian Rupee, Korean Won and Russian Ruble all against the United States Dollar. Further currencies are being added to the service with the aim to provide 95% market coverage.

NYSE Euronext outlines European clearing strategy and implementation plan
NYSE Euronext outlined its European clearing strategy and implementation plan, detailing the steps that will be taken to leverage its NYSE Liffe derivatives clearing platform to consolidate all of its European derivatives into a single derivatives clearing house, and delivering significant operational and margin efficiencies for clients. NYSE Euronext detailed the following steps: NYSE will build on the recent investments made in NYSE Liffe Clearing, the Central Counterparty to all trades conducted on the NYSE Liffe market in London, and will now complete the project to bring in house all remaining functionality currently out-sourced to LCH.Clearnet; it expects the fully self-sufficient Recognised Clearing House (RCH) in London to be completed, licensed and operational by the summer of 2013. Clearing for NYSE Euronext’s derivatives business traded in Amsterdam, Brussels, Lisbon and Paris, currently cleared with LCH.Clearnet in Paris, will be transferred to the new RCH in London early in the first quarter of 2014, subject to regulatory approval and finalization of precise timings with LCH.Clearnet. The aggregation of continental derivatives business with the London derivatives business in the same clearing house will release substantial capital savings for market participants, as a result of margin offsets across highly correlated products.

SIX x-clear now available on Turquoise
The clearing arm of SIX Securities Services, SIX x-clear, announced that its fully interoperable clearing and risk management services are now available on Turquoise. With this step, the clearing house continues its rapid European expansion after becoming interoperable on BATS and Chi-X earlier this year. It has continued to expand its service offering across numerous trading platforms. Clients have since benefited from greater choice, increased competition and lower end-to-end costs. SIX Securities Services’ clearing arm will now focus on launching interoperable services for the Nordic markets on platforms such as NASDAQ OMX Nordic and Burgundy.

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