HKEX’s OTC Clear successfully clears first trade for client clearing services

Maria Nikolova

OTC Clearing Hong Kong Limited has successfully cleared its first trade for client clearing services, with HSBC as the clearing broker for Chong Hing Bank.

Hong Kong Exchanges and Clearing Limited (HKEX) today announces that its over-the-counter derivatives clearing subsidiary, OTC Clearing Hong Kong Limited (OTC Clear), has successfully cleared its first trade for client clearing services, with HSBC as the clearing broker for Chong Hing Bank.

OTC Clear provides clearing and settlement services for OTC derivative transactions. Its client clearing services help OTC derivative market participants fulfil their regulatory obligations, as well as benefit from the enhanced credit and capital efficiency of central clearing.

By clearing at OTC Clear, clients will be able to realise cross product margining across different asset classes between portfolios such as interest rates swaps and cross currency swaps, and achieve portfolio margin efficiency. Under the central clearing mechanism, clients can make use of the qualified central counterparty to alleviate interbank counterparty credit limitations, especially with small and medium-sized institutions. This in turn enhances market liquidity.

Calvin Tai, Co-President and Chief Operating Officer, HKEX, said: “We are very excited to commence our client clearing services which allow clearing members to provide capital savings and netting benefits of central clearing for their clients. OTC Clear’s expanding suite of clearing services and products, combined with HSBC’s robust derivatives clearing capabilities, provide great opportunity to serve a continuously growing market.”

Justin Chan, Head of Greater China, Asia Pacific, Global Markets, HSBC, said: “HSBC is pleased to introduce client clearing service through HKEX OTC Clear, which demonstrates our continuous dedication in supporting the development of a safer and more efficient marketplace. Through the mitigation of counterparty risk, this solution serves as an essential bridge to facilitate our clients in navigating volatile market conditions.”

OTC Clear was formed in 2013 to provide OTC derivatives central clearing services. The central counterparty marked another robust quarter in the January-March period, with total clearing volumes reaching US$44.8 billion, while it recorded a 42% growth in cross currency swaps clearing volume to US$18.9 billion.

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