LCH announced on Aug. 14 that it has introduced a new type of client account within its SwapClear service. The account allows buy-side clients to deliver collateral directly to the clearinghouse and to retain beneficial title to it. To achieve this, the client or its custodian must open a segregated account with an international central securities depository such as Euroclear. LCH said this type of account increases operational efficiency and eliminates the transit risk arising where a client delivers collateral to the clearing house via its clearing member. LCH also announced that J.P. Morgan and Aviva Investors were the first to use this new account type.
“Being able to lodge collateral directly with LCH is a positive step as it allows us to manage our collateral delivery more effectively and to ensure our assets remain identifiable as ours while lodged at the CCP," said Barry Hadingham, head of derivatives and counterparty risk at Aviva Investors. "We’re proud to be the first client to use this new account type and look forward to continuing this work with LCH.”