RepoClear

History

In August 1999, the London Clearing House (LCH) introduced RepoClear, the first multi-market centralised clearing and netting facility for the European government repo and cash bond (outright) market. Today, RepoClear clears Austrian, Belgian, Dutch, UK, Portuguese, Irish, Finnish and German government bond and German Jumbo Pfandbriefe repos and cash bonds. Additional European government bond repo and cash bond markets will be added in the future, based on demand.

The Rationale for RepoClear

Banks active in the European repo markets, prior to RepoClear, were experiencing difficulties in maintaining and, indeed, increasing their repo activities as they ran into internal balance sheet, capital and credit limit constraints. In order to relieve these constraints, a group of bank members asked LCH to develop a repo clearing and netting facility. After carrying out a feasibility study amongst its members, LCH began work in earnest, liaising closely with the leading repo banks in Europe to develop the RepoClear service.

In addition to the balance sheet netting benefits outlined above, settlement netting, operational efficiencies and centralised risk management bring many more benefits to the cash bond and repo trading community.