Thomson Reuters Swap Execution Facility (SEF) undergoes rigorous certification testing with LCH.Clearnet to meet demanding functional and technical test requirements as a prerequisite to offering comprehensive functionality when providing a connection to clearing for dealer-client FX non-deliverable forwards (NDF) transactions
Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today announced that the Thomson Reuters SEF has completed certification testing for FX non-deliverable forwards (NDF) clearing by LCH.Clearnet’s ForexClear service. This is part of Thomson Reuters commitment to achieving the highest standards of best practice across its platforms.
Subject to standard regulatory notifications, this certification provides Thomson Reuters with the future ability to offer users of the Thomson Reuters SEF comprehensive functionality when providing access to central clearing of FX NDF transactions and enables Thomson Reuters customers to simplify risk management by removing the counterparty credit risk that comes with a non-centrally cleared model.
LCH.Clearnet’s certification programme is designed to ensure that customers using approved execution venues will benefit from highly integrated workflow for the clearing of FX NDF trades. The conformance testing carried out by LCH.Clearnet ensures that the two companies will be able to provide seamless communication across the trade lifecycle to these customers.
“Impending regulations on capital requirements will increase the relative costs of settling non-centrally cleared derivatives trades bilaterally. We recognise this cost, along with the benefits of removing counterparty credit risk, will naturally drive demand for FX NDF clearing even before it is mandated,” said Jodi Burns, global head of regulation and post-trade at Thomson Reuters. “Working closely with LCH.Clearnet, our objective was to ensure we meet the highest standards of performance and integration in providing access to central clearing to our customers on the Thomson Reuters SEF.”
The Thomson Reuters SEF currently handles almost two thirds of the market’s total average daily volumes of FX NDF bank-to-client SEF transactions. It allows customers to trade FX options, non-deliverable forwards (NDFs) and NDF swaps electronically through multibank request-for-quote liquidity and an anonymous central limit order book. Designed specifically to meet FX trading, clearing, and reporting obligations as mandated by the Dodd-Frank Act, the Thomson Reuters SEF provides a complete, end-to-end workflow solution with straight-through processing and settlement. Volumes on the Thomson Reuters SEF have increased by more than 20 percent in 2015.
LCH.Clearnet is a global, multi-asset class clearing house, serving major exchanges and platforms as well as a range of OTC markets.