First trades on LCH.Clearnet FX platform use Traiana CCP link
LCH.Clearnet and Traiana have processed the first trades on ForexConnect
LCH.Clearnet’s ForexClear service has cleared its first trades through a partnership with pre-trade risk and post-trade processing company Traiana, which matched and affirmed the FX derivative client trades using its Harmony CCP Connect service.
ForexClear is LCH.Clearnet’s new platform for bilateral foreign exchange trades. Each party independently submits their trade side to the matcher (in this case Traiana). Once matched, the trade is transmitted to LCH.Clearnet for clearing and novation through ForexClear. Notification of trade status updates are relayed from ForexClear to members via the matcher.
Traiana’s Harmony CCP Connect is a network tool designed to make interdealer and client clearing easier by linking up CCP connectivity, trade routing, affirmation, matching, allocation and reporting for OTC foreign exchange options and NDFs. The idea is that market participants can use their existing prime broker connectivity in combination with Harmony CCP Connect’s matching and affirmation to get direct access to CCPs. Traiana (a subsidiary of ICAP) says the service helps reduce lead times and complexity for market participants.
Foreign exchange derivatives are covered by Dodd Frank in the US and EMIR in Europe, which essentially mandate the central clearing, reporting and trading of the bulk of OTC derivatives in the name of improved market transparency. ForexClear calculates margin requirements throughout the 24-hour day and undertakes the risk netting and settlement of trades on maturity. Net daily financial settlement is made, throughout the life of the trade, using PPS. Distinct settlement at trade maturity is unnecessary due to the daily exchange of P&L via variation margin, according to LCH. Clearnet.
“We are extremely pleased to have been the first to match and affirm trades through our link with LCH.Clearnet on the day that the ForexClear client clearing service went live,” said Andy Coyne, chief executive at Traiana. “The success of clearing these first client trades underlines our commitment to help our clients meet their regulatory responsibilities.”
In April, Traiana opened its Swap Data Repository Service, Harmony TR Connect, which is designed to act as a messaging hub for connectivity between participants and trade repositories. It covers functions such as initial trade reporting, unique swap identifier generation, legal entity identifier, trade amendments, cancellations and snapshot reporting. The aim is to make it easier for market participants to report to trade repositories around the world, whether run by the DTCC or other organisations.
