LCH.Clearnet Group, a UK-based counterparty clearing house, has said that it will launch clearing service for Spanish government bonds and repos.
According to LCH.Clearnet, the first service will be launched on August 9, 2010 in response to market demand from both domestic and international banks. It will be operated by LCH.Clearnet Limited’s RepoClear service with trades settling at either Euroclear Bank or Clearstream Banking Luxembourg. In parallel, LCH.Clearnet SA is seeking to develop a complementary offering with a local settlement service.
By using this service, banks trading Spanish debt will be able to benefit from anonymous bond and repo trading, reduced counterparty risk and enhanced balance sheet netting. The service will be able to accept both electronic and voice brokered trades from multiple trading sources.
John Burke, director and head of fixed income at LCH.Clearnet, said: “Demand for us to launch this service has been growing steadily and market participants are keen for us to extend the benefits of our multi-market clearing and settlement service to Spanish debt.
“Reduced counterparty risk, anonymity when trading and the significant efficiencies that balance sheet netting brings are just some of the benefits of this service. In time, clearing is also likely to contribute towards an increase in trading liquidity, as it has for other European government debt markets.”