LCH.Clearnet Gets Green Light to Extend Interest Rate Swap Clearing to Australian Banks

Multi-national clearing house LCH.Clearnet said that the Australian government has granted an extension to its existing clearing and settlement facility licence that will enable LCH.Clearnet to offer its SwapClear over-the-counter (OTC) interest rate swap clearing service directly to Australian banks.

As members of SwapClear, Australian banks will be able to participate alongside international clearing members, enabling them to mitigate counterparty risk through clearing and realise greater portfolio netting efficiencies.

International banks operating in Australia are already actively clearing interest rate swaps via SwapClear and the licence will enable Australian banks to join them as direct clearing members, subject to UK regulatory approval.

SwapClear clears over 90% of the global cleared interest rate swap market and is a major provider of clearing for Australian dollar interest rate swaps. SwapClear’s members and clients benefit from access to the broadest range of OTC derivatives products and services in the greatest number of currencies offered by any central counterparty (CCP).

In May, LCH.Clearnet appointed Jack Drewe to serve as the local representative based in Sydney. Drewe will lead the build out of the office and SwapClear’s offering in Australia.

“We are delighted to have received approval to offer our leading OTC IRS SwapClear clearing service in Australia,” said Michael Davie, chief executive officer (CEO) of LCH.Clearnet’s SwapClear business. 

“This is an important milestone for LCH.Clearnet’s long-term growth strategy in the region, and we are looking forward to working with our new members and local partners to bring greater efficiency and transparency to the Australian market.”

Eddie Listorti, co- head of fixed income, currencies and commodities (FICC), ANZ Global Markets, said, “ANZ welcomes the government’s decision to license LCH.Clearnet’s SwapClear business to offer clearing services for interest rate swaps in Australia. 

“We see this as an important step for Australian financial institutions providing OTC derivatives products for their customers. We look forward to becoming a direct member of LCH.Clearnet as one of the key entities for clearing our global interest rate swaps business.”

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