LCH.Clearnet Ltd. has been formally recognized as a clearing agency by the Ontario Securities Commission (OSC), the company said Monday.
LCH reports that the OSC has granted it clearing agency recognition for interest rate swaps, bonds, repos, and other cleared contracts. Prior to this, it has been operating in Ontario under an interim exemption.
The firm reports that five Canadian institutions currently clear interest rate swaps through its swap clearing service, SwapClear. And, it notes that it was designated systemically important to the Canadian financial system by the Bank of Canada, due to the significance of interest rate swaps to the Canadian market, and the significant volumes cleared through SwapClear by Canadian institutions.
“We are pleased to be able to provide comprehensive and systemic OTC clearing services to the Canadian market and have worked closely with regulators and market participants to satisfy their requirements,” says Michael Davie, CEO of SwapClear at LCH.Clearnet.
“Given the sophistication and strength of its financial sector, the Canadian market is an important part of the OTC landscape and it’s been a privilege for LCH.Clearnet to be at the heart of the adoption of OTC clearing right from the outset,” he says, adding that OSC recognition “underscores our commitment to the Canadian market, and to providing our existing SwapClear offering to buy- and sell-side Canadian institutions…”
“SwapClear’s ‘systemically important’ designation recognises our central role in the reform of the Canadian OTC derivatives market and demonstrates the high standards of risk and operational management to which we adhere,” he adds.