Australian Markets To Benefit From Competition In Clearing
LCH.Clearnet Group (LCH.Clearnet), the leading international clearing house, today announced it will extend its clearing business for OTC interest rate instruments to Australian banks, bringing the benefits of clearing competition to one of the world’s top 10 capital markets.
LCH.Clearnet will apply for an Australian clearing and settlement facility licence that would enable it to offer its SwapClear OTC interest rate swap clearing to Australian banks, allowing them to join the existing services used by 70 international bank members. Four of Australia's five domestic banks have submitted letters of intent to use LCH.Clearnet's SwapClear to clear interest rate swaps. LCH.Clearnet’s SwapClear service currently clears A$3.9 trillion in Australian dollar denominated swaps, and the international members of the service have expressed strong support for SwapClear's expansion in Australia.
In other markets where clearing competition has been introduced, there has been 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.
LCH.Clearnet has a 12-year successful track record of clearing OTC instruments, testified to by the extensive scope and widespread adoption of its market-leading SwapClear interest rate swap clearing business.
"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."
LCH.Clearnet's decision whether to offer clearing for cash equities in Australia will depend on the outcome of the Council of Financial Regulators work on competition in the clearing and settlement in this market.