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LCH launches new model for buy-side repo clearing

First Published 14th September 2017

Sponsored Clearing from RepoClear offers buy-side firms direct access to LCH

Bruce Kellaway, LCH

Bruce Kellaway, LCH

LCH's RepoClear service has introduced a new model to bring clearing repos to the buy side. Insight Investment is the first asset manager to clear a trade, acting for a UK pension fund it manages, as a sponsored member, with NatWest Markets supporting Insight's trade as the agent member. The first trade was executed on Tradeweb Markets.

Buy-side firms such as pension funds are now able to access the service via a sponsorship model, whereby an agent bank provides support to the sponsored member. This support includes facilitating margin payments and providing default fund contributions for transactions made by the sponsored member.

This expansion of LCH's membership to the buy-side increases multilateral netting opportunities for members. The model is initially available for the 11 government debt markets cleared by LCH Ltd, with plans to roll out to LCH SA, subject to regulatory approval.

Bruce Kellaway, Global Head of RepoClear, EquityClear and Collateral, LCH, said: "The introduction of this Sponsored Clearing service is an exciting step for the fixed income market. RepoClear already has a comprehensive offering for our clearing members, and we are delighted to extend the benefits of clearing to the buy side, enabling firms to reduce their risk and maximise balance sheet efficiencies."

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