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LCH Limited, an LSEG business, has signed a Memorandum of Understanding (MoU) with CMU OmniClear Limited, a wholly owned subsidiary of the Exchange Fund that manages the Central Moneymarkets Unit (CMU) on behalf of the Hong Kong Monetary Authority (HKMA).
The agreement will see LCH Limited leverage Hong Kong’s Payment versus Payment (PvP) settlement solution to extend its product scope. This will include the clearing and settlement of CNH FX Options, Forwards, Swaps, and Spot transactions through its FX clearing service, ForexClear. The initiative aims to enable full multilateral netting and guaranteed settlement, addressing a significant barrier to increased trading activity in CNH FX products. LCH ForexClear and CMU OmniClear Limited also plan to explore the inclusion of other currencies, depending on market adoption and demand. The new offering is expected to be available in the first half of 2026, subject to regulatory approvals, and will allow settlement netting of trades executed by entities incorporated outside Hong Kong.
The move is a response to market demand for additional CNH product offerings and aligns with LCH’s objective of expanding its services to market participants globally. The company aims to deliver enhanced risk management and margin efficiencies through clearing.
LCH Limited also intends to expand its range of eligible collateral in 2026 to include CNH-denominated Chinese Government Bonds (CGBs), which will be settled and held in the CMU, pending regulatory submission and approval. This follows LCH Limited’s recent acceptance of USD and EUR-denominated CGBs held in Euroclear Bank. The inclusion of CGBs is intended to facilitate more efficient initial margin requirements for members and clients in the region.
LCH has previously introduced acceptance of Singaporean Government Bonds and USD/EUR denominated CGBs as eligible collateral, as well as Malaysian Ringgit non-deliverable interest rate swaps clearing. These developments have supported banks in expanding their participation in global derivatives markets. The collaboration with CMU OmniClear Limited is expected to provide advanced risk management and capital-efficient solutions to users of CNH-denominated instruments.
Susi de Verdelon, CEO, LCH Limited
Susi de Verdelon, CEO, LCH Limited, said:
“We are delighted to partner with CMU OmniClear, and our clearing member banks and customers, as we embark on our ambitious plans to expand our services to market participants who want to trade and settle deliverable CNH derivatives and debt securities globally. The APAC region continues to be a strategic focus for LCH, and we look forward to continued partnership as a greater number of financial institutions benefit from the margin, capital, and operational efficiencies that our services deliver.”
Stanley Chan, Chief Executive Officer, CMU OmniClear Limited, commented:
“The collaboration between CMU OmniClear and LCH demonstrates the strong demand from global investors for CNH-denominated debt securities, derivatives and related risk management tools. It also highlights the unparalleled role of Hong Kong’s payment and settlement infrastructure in supporting investment in CNH-denominated debt securities by investors from all over the world. We are pleased that CGBs held in Hong Kong’s central securities depository infrastructure will, for the first time, be accepted as eligible collateral outside of Hong Kong. CMU OmniClear will continue to collaborate with market infrastructures, regulators and market participants to extend our service coverage, further consolidating Hong Kong’s role as the international financial centre for Renminbi-related business.”
Andrew Ng, Group Executive and Group Head of Global Financial Markets, DBS Bank
Andrew Ng, Group Executive and Group Head of Global Financial Markets, DBS Bank, added:
“CNH volumes have grown exponentially in recent years as the currency becomes more internationalised. This is a major development which will support financial institutions across multiple jurisdictions who want to trade CNH derivatives and benefit from the risk and margin efficiencies of clearing. As a leader in Asian financial markets, DBS welcomes developments that strengthen the safety, resilience and depth of the derivatives markets in Singapore and the region. Further, LCH’s expansion of eligible collateral to include Chinese Government Bonds will be a particularly important step in the development of the CNH derivatives market.”
Cheuk Wong, Head of Markets and Securities Services, Hong Kong, HSBC, said:
“We are excited by LCH's new CNH clearing services, which we believe will significantly expand the use of CNH derivatives in international markets. This development marks an important step in market maturity and aligns with our commitment to enhance market liquidity while supporting the use of Chinese Government Bonds as collateral and CNH as an international funding currency. We expect our clients to welcome a more efficient CNH derivatives market as the internationalisation of the renminbi continues to gain momentum.”
Wang Huabin, Deputy Chief Executive, Bank of China (Hong Kong) (“BOCHK”)
Wang Huabin, Deputy Chief Executive, Bank of China (Hong Kong) (“BOCHK”), commented:
“BOCHK welcomes LCH’s inclusion of offshore CNH government bonds as collateral and the introduction of the USD/CNH currency pair on LCH ForexClear. Since 2009, the Ministry of Finance of the People's Republic of China has been issuing CNH government bonds which have expanded the usage scenario for RMB. LCH’s initiatives enable investors to better utilise CNH bond holdings as collateral to improve trading and clearing efficiency, while the introduction of the USD/CNH currency pair will enhance netting benefits and reduce counterparty risk for trading FX products. As a Chinese clearing member of LCH, BOCHK looks forward to partnering with LCH on further innovations in RMB-denominated products, fostering a more integrated global financial landscape.”
Central clearing remains a key focus for financial institutions in the Asia-Pacific region. With notable increases in FX Options and FX Forwards trading volumes for the Chinese Yuan, LCH anticipates substantial demand among financial institutions to clear this currency. LCH has expanded its presence in APAC across both ForexClear and SwapClear services, with 24 direct members and over 180 clients, reflecting 31% and 24% year-on-year growth in number of trades cleared in Q1, respectively.
