LCH launches SwapClear account with assets segregated at custodian level

LCH has introduced CustodialSeg, a new type of client account within its SwapClear service. The account allows buy-side clients to deliver collateral directly to the clearing house and to retain beneficial title to it. Segregation at an ICSD ensures that such securities collateral remains client-specific. This increases operational efficiency and also eliminates the transit risk arising where a client delivers collateral to the clearing house via its clearing member. J.P. Morgan is the first clearing member, and Aviva Investors is the first buy-side client, to use this new account type. HSBC has also confirmed its readiness to support the new account structure.

To enable a client to transfer collateral directly from its account to LCH, the client or its custodian must open a segregated account with an ICSD. Euroclear Bank is the first ICSD to provide this service for the CustodialSeg account. The CustodialSeg account is available for eligible SwapClear clients in England, Ireland, Scotland and the Netherlands who are accessing clearing via a SwapClear clearing member.

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