Capitolis taps LCH’s FX Smart Clearing to further mitigate counterparty credit risk in OTC FX

Rick Steves

“Combining FX Smart Clearing with our post-trade optimization technology is the ideal approach to managing capital for our customers.”

Capitolis has connected to LCH’s FX Smart Clearing solution to add another layer of optimization benefits to help banks overcome the challenge of increased costs resulting from the introduction of the Standardized Approach to Counterparty Credit Risk (SA-CCR) and other risk measures in the FX industry, particularly relating to FX forwards, FX swaps and cross-currency swaps.

The firm’s proprietary technology optimizes capital risk-weighted assets and funding requirements for the OTC FX market to mitigate counterparty credit risk across global banks.

Network yield of 42% of total funding costs

Capitolis’ post-trade optimization will be put to work in collaboration with LSEG’s post-trade division firm LCH ForexClear to help find the optimum capital and funding state between cleared and uncleared markets by moving optimized trades where they best fit.

In a proof-of-concept with nine global banks, Capitolis reached a network yield of 42% of total funding costs including the funding of capital in a demonstration of the benefits in capital and funding that FX Smart Clearing would provide to the company’s existing SA-CCR optimization service.

Capitolis will now roll out the service in conjunction with LCH ForexClear to reduce capital burdens and balance margin requirements for global banks.

LCH’s FX Smart Clearing combined with Capitolis’ post-trade optimization

Gil Mandelzis, CEO & Founder, Capitolis, said: “Combining FX Smart Clearing with our post-trade optimization technology is the ideal approach to managing capital for our customers. The relationship with LCH ForexClear, coupled with our network of participating global banks, is a sophisticated and advanced model for the industry, bringing multi-lateral optimization to the next level by including a clearing node.”

James Pearson, Head of LCH ForexClear, commented: “We are pleased to work with Capitolis. Through this initiative, more market participants can benefit from FX Smart Clearing, enabling capital and funding requirement benefits under SA-CCR. FX Smart Clearing is another tool we are providing for banks to financially optimize their resources, unlock capital constraints and help to ensure a safe and efficient financial system.”

Read this next

Digital Assets

Binance tames up with Japan’s biggest lender to launch stablecoins

Binance Japan is planning to launch stablecoins denominated in the dollar, euro, and yen in Japan in 2024. The crypto exchange aims to introduce these tokens, and possibly more, through its partnership with Mitsubishi UFJ Financial Group’s trust banking arm.

Institutional FX

Spot FX volumes drop +10% at CLS in August 2023

Total daily traded volume submitted to CLS for settlement took a step back in August as the summer typical lull hit market activity. The metrics showed a weak performance in the group’s FX business as the Q3 got off to a calm end while no fresh events were able to whip up a market frenzy.

Digital Assets

Veteran iGaming Team Launch Crypto Casino Portal

CryptoCasinos.Casino launches as a premier destination for crypto gambling aficionados, offering in-depth reviews, comparisons, and resources to navigate the burgeoning world of cryptocurrency-based casinos seamlessly.

Digital Assets

Xsolla Announces Acquisition of AcceleratXR, A Multi-Player Platform For Games

Xsolla enhances its gaming tech suite with the acquisition of AcceleratXR, bolstering cross-platform game development and pioneering advancements in cross-play experiences for players worldwide.

Digital Assets

OKX’s PoR report shows no solvency concerns, assets worth $11.2 billion

Cryptocurrency exchange OKX has released its 11th consecutive proof-of-reserves report amid increasing demand of crypto investors asking for transparency from exchanges they trade with.

Digital Assets

Horizen Launches Decentralized Governance with Introduction of Horizen DAO

Horizen inaugurates a novel decentralized autonomous organization, inviting broader community participation and heralding a new chapter in blockchain governance.

Digital Assets

Binance France induces users to convert their fiat into crypto

Following the expiration of its partnership with Paysafe, Binance France urged its customers to convert their fiat currency holdings on the platform into cryptocurrencies.

Industry News

Exness Crowned as Best Global Multi-asset Broker at Forex Expo Dubai 2023

Cyprus-based Exness garners top honors at the Forex Expo Dubai, solidifying its esteemed position in the global financial arena.

Retail FX

CySEC cancels license of 101investing parent following €200,000 fine

The Cyprus Securities and Exchange Commission (CySEC) confirmed on Tuesday that it has wholly withdrawn the Cyprus Investment Firm (CIF) License of FX retail brokerage firm FXBFI Broker Financial Invest Ltd, trading as 101investing.