Spotlight on FX Smart Clearing with The Full FX & Esben Urbak, Quantile’s Head of Product

Watch Esben Urbak, Head of Product, discuss the benefits of Smart Clearing with Colin Lambert, Editor at The Full FX.

Smart Clearing enables participants to selectively clear FX Forwards via LCH ForexClear to significantly reduce counterparty risk and capital requirements while controlling the CCP margin requirements. It works by intelligently selecting existing uncleared trades to move to LCH ForexClear, and optimising portfolios with new rebalancing trades to reduce counterparty risk and the financial resources a participant must hold. The optimisation can be fully customised, enabling participants to control their risk and resource changes, as well as their preferred currency pairs and trading partners. Portfolios can also be potentially compressed to significantly reduce trade count and notional.

By moving FX Forwards into LCH ForexClear, participants benefit from multilateral netting, lower counterparty risk weights and settled to market (STM) treatment – all of which reduce capital requirements and counterparty risk. Quantile’s optimisation then ensures the risk reduction is achieved within the relevant IM and risk constraints.