Press Release
| Contact: | Siobhan White – Director, Treasury Operations
|
Michael March – Director, Corporate Communications
|
LCH.Clearnet Ltd establishes payment arrangements with the Bank of England
London 29 September 2005
LCH.Clearnet announces that the Bank of England has today become the concentration bank for Sterling and Euro payments.
Sterling and Euro cash flows and margin, collected from members’ bankers through the Protected Payments System (PPS), will now be concentrated at the Bank of England. The sums involved, which vary daily, average approximately £1 billion each working day.
A report compiled by the Bank of England and the Financial Services Authority in 2001 following an earlier report by the Committee on Payment Settlement
Systems (CPSS) recommended the move to central bank accounts.
The change is a further step in the harmonisation of business practices within the LCH.Clearnet Group as LCH.Clearnet SA already operates on this basis.
The Payment Systems Oversight Report 2004, published by the Bank of England, highlighted the critical role that LCH.Clearnet Ltd's concentration banks play in the
operation of the PPS, and therefore in the functioning of LCH.Clearnet Ltd as a central counterparty. The transfer of the role of concentration bank to the Bank of
England effectively eliminates any possibility of commercial credit risk on funds held at the concentration bank in these currencies.
Andrew Lamb, Chief Executive at LCH.Clearnet Ltd, said; “The move to the Bank of England follows international recommendations, and removes an element of
residual counterparty risk.
We are particularly grateful to our previous sterling and euro concentration bankers for their work over the years and look forward to working with them in other areas.”