LCH Limited, an LSEG business, has announced the signing of a Memorandum of Understanding (MoU) with CMU OmniClear Limited.

CMU OmniClear is a wholly owned subsidiary of the Exchange Fund, managing the operations and business development activities of the Central Moneymarkets Unit (CMU) on behalf of the Hong Kong Monetary Authority (HKMA).

By leveraging Hong Kong’s Payment versus Payment (PvP) settlement solution, LCH Limited will extend its product scope to include the clearing and settlement of CNH FX Options, Forwards, Swaps and Spot transactions through its FX clearing service, ForexClear. The solution aims to enable full multilateral netting and guaranteed settlement, thereby removing a significant barrier to increased trading activity.

Additionally, LCH ForexClear and CMU OmniClear Limited plan to explore the inclusion of other currencies based on initial 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 in entities incorporated outside of Hong Kong.

These new initiatives are driven by market demand for additional CNH product offerings and are aligned with LCH’s objective of extending its services to market participants globally, allowing them to benefit from the enhanced risk management and margin efficiencies through clearing.

In response to customer demand, LCH Limited will also look 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 initiative follows LCH Limited’s recent announcement that it had begun accepting USD and EUR-denominated CGBs, held in Euroclear Bank. With increasing participation from members and clients in the region, the eligibility of CGBs will facilitate their ability to meet initial margin requirements more efficiently.

LCH has consistently aimed to deliver capital and margin efficiencies to market participants trading within the Asian derivatives market. Acceptance of Singaporean Government Bonds and USD/EUR denominated CGBs as eligible collateral, and Malaysian Ringgit non-deliverable interest rate swaps clearing are some recent developments that have supported banks in growing their participation in global derivatives markets.

This collaboration with CMU OmniClear Limited enables LCH Limited to deliver advanced risk management and capital efficient solutions to users of key CNH-denominated instruments.

Central clearing continues to be a key focus for financial institutions in the Asia-Pacific region. With significant increases in FX Options and FX Forwards trading volumes for the Chinese Yuan, LCH anticipates substantial demand among financial institutions to clear this currency, as they look to benefit from robust risk management and capital efficiencies.

Furthermore, LCH has significantly expanded its presence in APAC across both its ForexClear and SwapClear services, with 24 direct members and over 180 clients, reflecting a 31% and 24% year-on-year growth in number of trades cleared in Q1, respectively.