JP Morgan launches OTC clearing for AUD and NZD-denominated OTC derivatives using ASX clearing service

Maria Nikolova

JP Morgan becomes the first ASX OTC Clearing participant to launch an agency clearing service for Australian and New Zealand dollar denominated OTC derivatives.

J.P. Morgan and the Australian Securities Exchange (ASX) have announced that J.P Morgan has become the first ASX Over the Counter (OTC) Clearing participant to launch an agency clearing service for Australian (AUD) and New Zealand (NZD) dollar denominated OTC derivatives, having successfully cleared a trade for one of its underlying clients.

J.P. Morgan’s launch underlines its commitment to clearing and the OTC derivatives market, and capitalises on ASX’s technology investment in the area.

David Martin, Head of Asia Clearing at J.P. Morgan, noted that:

“Globally, we are focused on broadening the portfolio of products that we can clear for our clients, and expanding the list of clearing houses that we can support”.

“J.P. Morgan’s approach also allows our clients to use the depth of our local Markets franchise and our ability to make markets at the ASX,” he said.

ASX operates the largest listed interest rate derivatives market in Asia (with annual notional turnover of $53 trillion) and has a fully developed OTC Clearing service, which provides global standard API connectivity, 24-hour clearing, AUD and NZD product coverage, and a fully automated cross-margining facility. ASX has attracted meaningful market share to its dealer to dealer OTC clearing service, which has been in operation since 2013, clearing $6.3 trillion in notional value last financial year.

Helen Lofthouse, Executive General Manager Derivatives and OTC Markets at ASX, said,

“J.P. Morgan’s access to ASX’s OTC Client Clearing service demonstrates its commitment to providing the best solutions for its clients. It also shows ASX’s determination to develop services valued by the market, which includes local clearing that’s open throughout the Australian and New Zealand time zone.”

J.P. Morgan clearing solution offers a number of advantages, includingthat Australian-domiciled clients will benefit from being able to keep all of their AUD and NZD cleared derivative trades in one clearing house, operating within a single legal construct and leveraging local infrastructure.

David Stinson, Futures & Options and OTC Clearing at J.P. Morgan, commented:

“Clients that are trading AUD and NZD overnight index swaps and interest rate swaps will be able to take maximum advantage of a local clearing provider open through the Australian business day, realising both the operational and risk benefits of seeing their positions updated and refreshed in a local time zone, in local currency”.

“By supporting the cross-margining facility that ASX offers across its cleared interest rate derivatives, we are extending this benefit to buy-side clients and allowing them to access funding and margin efficiencies,” Mr Stinson said.

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