Hong Kong’s OTC Clear secures license from Japanese FSA

Maria Nikolova

OTC Clear has received FSA’s approval to offer client clearing services to banks in Japan.

Hong Kong Exchanges and Clearing Limited (HKEX) has earlier today announced that its central counterparty subsidiary, OTC Clearing Hong Kong Limited (OTC Clear), has secured the approval to offer client clearing services to banks in Japan.

OTC Clear has obtained a license from the Financial Services Agency (FSA) of Japan to become a Foreign Financial Instruments Clearing Organisation. This allows OTC Clear it to offer clearing services to Japanese banks, which have shown strong demand in clearing cross currency swaps with OTC Clear. Via clearing cross currency swaps with HKEX, banks could significantly reduce their capital costs.

In addition to Japan, OTC Clear is also recognised by authorities in the US, European Union, and Australia to offer clearing services to their financial institutions.

Separately, OTC Clear has welcomed Barclays Bank PLC as its Clearing Member and 6th European Clearing Member.

Calvin Tai, HKEX Co-President and Chief Operating Officer, commented: “We are pleased to have Barclays join OTC Clear as a direct Clearing Member, leveraging our unique clearing solutions in the offshore renminbi, or CNH. As a global market leader in the Asian Time Zone, we help connect Mainland Chinese banks to the global markets.”

All existing Clearing Members can now submit, upon bilateral agreement, Original Standard Rates Derivatives Transactions and Original Standard Cross-currency Rates Derivatives Transactions transacted with Barclays Bank PLC for central clearing through OTC Clear. Clearing Members are recommended to review their set-up in relevant Approved Trade Registration Systems (ATRS) to make sure that necessary trading and clearing permission has been properly assigned with the New Clearing Member.

“We are delighted to be a direct clearing member of HKEX’s OTC Clear,” said Kelvin Sze, Barclays’ Head of Macro Trading, Hong Kong. “OTC Clear has been a significant industry development with its well-established network of members. As one of the founding shareholders, we are looking forward to facilitating greater access for our counterparties in the region with this additional clearing channel to meet their offshore renminbi needs.”

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