LCH has extended the range of eligible collateral accepted as initial margin to include Singapore Dollar-denominated government bonds, treasury bills and cash.
This change is enacted immediately (ie from Monday 18 October) and follows shortly after LCH announced that it is extending its LCH SwapClear service to 24-hour opening.
The clearing house, owned by London Stock Exchange Group, says that these developments will “make it easier for Asian clients to access and use the premier service at LCH”.
Accepting SGD collateral will be an important step in improving liquidity management and helping members to optimise their margin costs, says LCH.
LCH CEO Isabelle Girolami says: “LCH continues to expand our collateral services so that we can provide members with new opportunities to use a broad range of collateral in new settlement locations.
“The latest development is vital to meeting the needs of the local Singapore market and a strategic point of engagement with our Singapore clients. It also marks another move by LCH to become laser focused on the Asia-Pacific region.”
LCH head of APAC Rohit Verma adds: “The spike in volatility in 2002 March-April brought the spotlight back on liquidity risk. In the world of clearing and UMR, eligible collateral has become a binding constraint.
“We have our ears to the ground and to make it easier for our Asia-domiciled client base, we are excited to offer one more eligible collateral type that will help our clients and members in managing their liquidity.”
David Martin, JP Morgan managing director and Asia Pacific head of global clearing, says: “We welcome this expansion as it provides further flexibility for our clients, particularly those with large SGD balances, to more effectively utilise their collateral and manage the cost of funding.”
LCH has clearing houses incorporated in France (LCH SA) and the UK (LCH Ltd) and has offices in the US and Asia Pacific region.
It delivers multi-asset class clearing services, including OTC and listed interest rate swaps, credit default swaps and foreign exchange, fixed income, commodities, cash equities and equity derivatives. It also supports the non-cleared derivatives market via LCH SwapAgent.
