Buy-side physical FX clearing at LCH faces scepticism
Lack of clearing mandate and settlement wrangles mean demand for putative service remains weak
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The onward march of central clearing in financial markets has hit an obstacle. A move by the world’s largest clearing house to encourage asset managers and hedge funds to clear deliverable foreign exchange trades is foundering, market participants say.
Questions have been raised over the costs to clients and banks from this type of clearing, as well as access to foreign currency for settlement. The lack of a regulatory imperative is also thought to have blunted demand.