LCH Limited, a LSEG business, announced the signing of a Memorandum of Agreement (MOU) with CMU Omniclear Limited.
CMU Omniclear is a subsidiary of the Exchange Fund, Managing Central Moneymarkets Unit (CMU) on behalf of Hong Kong Monetary Authority (HKMA).
By utilizing the Hong Kong settlement solution against payment (PVP), LCH Limited will extend its scope to include clearing and settlement of CNH FX options, forwards, exchanges and spot transactions through the FX Clearance Service. The solution aims to allow complete multilateral settlement and guaranteed settlement, thereby removing a significant obstacle to increased commercial activity.
In addition, the Lch Forexlear and the CMU Omnlear Limited plan to explore the inclusion of other coins based on the initial adoption and demand for the market.
The new bid is expected to be available in the first half of 2026, subject to regulatory approvals and will allow the settlement of transactions executed into entities incorporated outside Hong Kong.
These new initiatives are guided by market demand for additional CNH offers and aligned with LCH’s goal of expanding its services to market participants worldwide, allowing them to benefit from increased risk management and effectiveness of the margin through clearance.
Responding to customer demand, LCH Limited will also seek to extend the range of eligible collateral in 2026 to include Chinese government bonds (CGBs), which will be settled and held on the CMU, waiting for regulatory submission and approval.
This initiative follows LCH Limited’s recent announcement that it had begun to accept CGBs USD and EUR-Deniadered CGBs held at Euroclear Bank. With the growing involvement of members and customers in the area, CGBS’s eligibility will facilitate their ability to respond more effectively to the initial margin requirements.
LCH aims to deliver the effectiveness of capital and margin for market participants negotiating in the Asian derivative market. The acceptance of Singapore and CGBS government bonds called USD/EUR as eligible securing and the clearing of non -Malaysian interest rates are some recent developments that supported banks in increasing their participation in the world derivatives.
This collaboration with CMU Omniclear Limited allows LCH limited to provide advanced risk management and efficient capital solutions to CNH basic users.
Central liquidation is still a key focus for financial institutions in the Asia-Pacific region. With significant increases in FX and FX options to the front volumes of trade for Chinese yuan, LCH is awaiting significant demand among financial institutions to liquidate this currency, as they seek to benefit from strong risk management and capital efficiency.
In addition, LCH has significantly expanded its presence at the APAC to both for Exclear and Swapclear, with 24 direct members and over 180 customers, reflecting the increase in the number of transactions by 31% and 24% on a yearly basis, respectively.