headquarters london united kingdom products clearing house website www.lchclearnet.com lch is a european based independent clearing house that serves major international exchanges as well as a range of otc markets . based on 2012 figures lch.clearnet cleared approximately 50 % of the global interest rate swap market 1 and is the second largest clearer of bonds and repos in the world providing services across 13 government debt markets . in addition lch.clearnet clears a broad range of asset classes including commodities securities exchange traded derivatives credit default swaps energy contracts freight derivatives interest rate swaps foreign exchange and euro and sterling denominated bonds and repos . lch s members comprise a large number of the major financial groups including almost all of the major investment banks broker dealers and international commodity houses . lch.clearnet being a clearing house sits in the middle of a trade assuming the counterparty risk involved when two parties trade guaranteeing the settlement of the trade . to mitigate the risks involved it imposes certain minimum requirements on its members and collects initial and variation margin or collateral from them for trades that have been executed . contents 1 history 1.1 london clearing house 1.2 clearnet 1.3 post merger 2 products 2.1 commodities 2.2 credit default swaps 2.3 derivatives 2.3.1 energy 2.3.2 equities 2.3.3 centrally cleared cfds 2.3.4 fixed income 2.3.5 freight 2.3.5.1 container freight 2.3.6 interest rate swaps 2.3.7 foreign exchange 3 regulation 4 see also 5 references 6 external links history edit lch traces its roots back to the london clearing house established in 1888 and the paris based clearnet established in 1969 . both developed from clearing commodity transactions . they merged in 2003 to form lch.clearnet . london clearing house edit 1888 the london produce clearing house lpch is established to clear commodities contracts in london . shares are in public ownership and the company is listed on the london stock exchange . 1951 lpch is wholly acquired by united dominions trust . 1971 the company is renamed the international commodities clearing house icch . 1980 ownership passes to a consortium of six british banks . 1992 icch divests the clearing software business to sungard and is renamed the london clearing house ltd lch . 1996 majority ownership of lch transfers to the whole clearing membership with the lme ipe and liffe acquiring minority ownership . 2003 lch.clearnet group is formed following the merger of the london clearing house and clearnet sa . clearnet edit 1969 banque centrale de compensation sa is established to clear contracts traded in paris commodity markets . 1990 banque centrale de compensation sa becomes a subsidiary of matif and is the first organisation in europe to clear both cash and derivatives . 1998 bourse de paris takes control of matif . clearnet launches a clearing service for french government securities and is the first organisation in europe to permit remote clearing . 1999 restructuring of the french markets all the regulated markets in paris are run by a single body the soci t des bourses francaises trading under the name of euronext paris . clearnet is spun off as a subsidiary of euronext and becomes the clearing house for all products traded in the paris markets . 2000 euronext is established through the merger of bourse de paris the amsterdam exchanges and the brussels exchanges . 2001 clearnet merges with euronext amsterdam s and euronext brussels clearing houses . 2003 euronext lisbon contributes its derivative and otc equity clearing businesses to clearnet which thus acquires a branch in portugal to establish a local presence with portuguese clearing members . 2003 lch.clearnet group is formed following the merger of the london clearing house and clearnet sa . post merger edit 2003 lch.clearnet group is formed following the merger of the london clearing house and clearnet sa . new ownership comprises clearing members 45.1 % exchanges 45.1 % euroclear 9.8 % . 2007 lch.clearnet and euronext announce repurchase by lch.clearnet of shares held by euronext to more closely align customer and shareholder interests . revised ownership comprises clearing members 73.3 % exchanges 10.9 % euroclear 15.8 % . 2008 lch.clearnet successfully resolves 9 trillion of lehman brothers otc interest rate swap defaults . 2009 us office opened . 2009 dormant shareholders are retired and shareholders are given the option to reduce or exit their holdings . revised ownership comprises clearing members 82.85 % exchanges 17.15 % . 2012 the london stock exchange gets enough support to acquiring a 60 % stake in lch.clearnet with an offer of 19 per share giving lch.clearnet a valuation of 813 million 677 million 1.1 billion . 2 2012 lch.clearnet acquired sole ownership of international derivatives clearing group llc from the nasdaq omx group inc. and certain other investors . idcg became a u.s. subsidiary of lch.clearnet reinforcing lch.clearnet s presence in the u.s. marketplace where it already operated irs clearing through its swapclear service . products edit lch.clearnet provides clearing or central counterparty services in the following markets commodities edit lch.clearnet has over 100 years experience clearing commodities and provides clearing and settlement services for both the exchange traded and the otc commodity markets . lch.clearnet clears commodities including non ferrous metals 100 million metal trades are cleared annually plastics and steel which are exchange traded on the london metal exchange as well as a broad range of futures and options contracts covering soft and agricultural products . it also clears over the counter products including gold coal steel and iron ore and fertilizer swaps . credit default swaps edit in 2012 lch launched its international cdsclear service working with a further 10 international institutions in addition to the four french member banks . this builds on the previous service which initially covered european indices . the cds service provides full stp multilateral clearing reduced counterparty risk and post trade anonymity and encompasses the core requirements as determined by key industry and policy groups including isda cesr the ecb and the european commission . the service also allows members a flexible set of facilities to manage their non cash collateral placed at lch.clearnet . derivatives edit lch is the largest and only user owned and user governed global supplier of clearing services to the derivatives markets . this is either directly to the user community or by operating the clearing process on behalf of a third party via an insourcing arrangement providing services to clients for short term interest rates stirs indexes and equity derivatives . energy edit lch provides clearing services to clients for otc emissions trading and the us electricity trading on the nodal exchange the first independent electronic commodities exchange offering locational forward trading products and services to participants in the organised north american power markets . lch.clearnet also provided services for bluenext futures eua and bluenext futures cer and today future contracts on eu allowances and on certified emission reductions . equities edit equityclear lch s equity clearing service offers clearing for equities and equity equivalents such as exchange traded funds etfs exchange traded commodities etcs real estate investment trusts reits and exchange traded bonds . lch.clearnet clears equity based trades that are executed on the london stock exchange lse six swiss exchange bats chi x europe nyse euronext bourse de luxembourg and equiduct . centrally cleared cfds edit lch was the first in europe to launch a clearing service for contracts for difference cfds and the first clearer globally to offer cfd clearing for institutional investors . cfds were first launched in the uk in the early 90s as a short access product . since then their use has grown across the world . lch s centrally cleared cfd cccfd service in conjunction with chi x europe are an alternative to the traditionally over the counter traded cfds and is line with the european commissions aim to increase the proportion of cleared otc contracts . fixed income edit lch has been working with fixed income markets since 1998 and provides clearing services covering french italian and spanish government debts on cash and repo transactions traded by financial institutions including euro mts mts france mts italy icap brokertec and tullett prebon and trade providers such as the euroclear trade capture and matching system euroclear s matching system and viel tradition . lch s repoclear service was established in partnership with leading banks in 1999 as the first multi market centralised clearing and netting facility for some 13 european government repo and cash bond markets and a range of pan european gc baskets . as of 2012 monthly volumes averaged c. 13 trillion and repoclear clears cash bond and repo trades in the following markets austrian belgian dutch german irish finnish portuguese slovakian slovenian spanish and uk government bonds . additional markets served include german jumbo pfandbriefe and supranationals agency and sovereign . there are 12 trillion repo trades per month based on nominal value cleared through lch.clearnet . freight edit lch s freight service was launched in september 2005 with the support of the freight broking community . it provides an independent clearing service for the registration of otc forward freight agreements ffas for the most actively traded routes ; thirteen dry and ten wet routes as well as options on the four dry timecharter routes capesize panamax supramax and handysize . container freight edit in june 2010 lch as a member of the container freight derivatives association launched a clearing service for the containerised freight market . the service provides an independent clearing service for the registration of otc container freight swap agreements cfsas for four of the most actively traded routes out of shanghai . interest rate swaps edit swapclear is a global clearing service for otc interest rate swaps and currently clears more than 50 % of the global notional market . launched in 1999 swapclear initially cleared plain vanilla interest rate swaps in four major currencies . today it clears swaps in 17 currencies ; usd eur and gbp out to 50 years aud cad chf sek and vanilla jpy out to 30 years and the remaining 9 currencies out to 10 years . it also clears ois out to 2 years in usd eur gbp and chf . to date over 2 million trades in swapclear have an aggregate notional principal amount of over 316 trillion . in september 2008 lch.clearnet successfully managed lehman brothers us 9 trillion interest rate swap default comprising over 66 000 trades by implementing swapclear s default management process . the default was fully resolved well within the margin held and at no loss to other market participants . in december 2009 swapclear launched a new client clearing service a first for the buy side community to access clearing interest rate swaps . the service offers unique levels of security to clients and has added functionality to support the segregation of client portfolios and margin . foreign exchange edit since the lehman brothers collapse market weaknesses have been under intense scrutiny from financial institutions and regulators alike and therefore financial markets are currently undergoing a period of unprecedented regulatory reform . a key area of proposed legislation is mandatory central clearing for some otc derivative instruments including foreign exchange . after in depth research and analysis of the fx derivatives market and its inherent risks lch.clearnet launched a new custom built non deliverable fx forward ndf clearing solution forexclear . forexclear covers the most actively traded currencies in the ndf marketplace . subsequent phases of development will include a broader range of currencies and tenors along with additional otc foreign exchange products such as ndos fxos ndf crosses forwards and swaps . regulation edit lch is regulated or overseen by the national securities regulator and or central bank in each jurisdiction from which it operates . 1 regulated as a compagnie financi re by the autorit de contr le prudentiel france . 2 regulated as a derivatives clearing organization by the us commodity futures trading commission . 3 regulated