LCH announces Singapore Dollar (SGD) as collatoral option

Rick Steves

Accepting SGD collateral will be an important tool in improving liquidity management and helping members and clients optimize their margin costs.

LCH has expanded its range of eligible securities to include Singapore Dollar denominated cash and securities (government bonds and treasury bills) as collateral.

The inclusion will commence from 18th October 2021 and the acceptance of SGD collateral comes shortly after the announcement of the expansion of LCH SwapClear opening hours to 24 hours per day.

The leading global clearing house has stated both announcements are important steps in making it easier for Asian clients to access and use the premier service at LCH.

The addition of the Singapore Dollar to a select group of currencies accepted as cash margin at LCH reflects the growing number and importance of Asian members and clients at LCH, particularly in Singapore.

Accepting SGD collateral will be an important tool in improving liquidity management and helping members and clients optimize their margin costs.

David Martin, Managing Director – Asia Pacific Head of Global Clearing, JP Morgan said: “We welcome this expansion as it provides greater flexibility for our clients, particularly those with large SGD balances, to more effectively utilise their collateral and manage the cost of funding.”

Isabelle Girolami, Chief Executive Officer at LCH, said: “LCH continues to expand our collateral services so that we can provide members with new opportunities to use a broad range of collateral in new settlement locations. This latest development is vital to meeting the needs of the local Singapore market and a strategic point of engagement with our Singapore clients. It also marks another move by LCH to become laser focused on the Asia Pacific region.”

Rohit Verma, Head of APAC at LCH, commented: “The spike in volatility in 2020 March-April brought the spotlight back on Liquidity Risk. In the world of clearing and UMR, eligible collateral has become a binding constraint. We have our ears to the ground and to make it easier for our Asia domiciled client base, we are excited to offer one more eligible collateral type that will help our clients and members in managing their liquidity.”

LCH and the member community are looking forward to broad market adoption, the firm added, as the clearinghouse provides state-of-the-art tools to maximize the efficiency of managing their collateral assets.

The clearinghouse has reported several record volumes in September. The implementation of the latest phase of the uncleared margin rules in September served as a specific milestone for the derivatives market.

Attention is turning to the cessation of LIBOR at the end of the year and the firm remains committed to supporting the market in this reform and driving the migration to risk-free rates.

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