The UK Financial Services Authority (FSA) has granted NYSE Liffe approval to launch a new central clearing counterparty (CCP) for its London derivatives market. The CCP, which will be dubbed Nyse Liffe Clearing, is due to begin operations on 27 July 2009, subject to a period of review by members of its proposed documentation.
The approval allows Liffe to become a self-clearing recognised investment exchange, act as CCP for the London derivatives market and manage its own London clearing operations directly. The proposed documentation awaiting member approval includes amendments to rules and clearing arrangements, as well as the new arrangements and the finalisation of tax relief with HM Treasury.
The NYSE Euronext owned derivatives business has been planning the move for some time and it entered into a binding agreement with LCH.Clearnet to establish the CCP in October last year. Garry Jones, group executive vice president and head of global derivatives for NYSE Liffe, says: “The new clearing arrangements will enable us for the first time to forge a direct clearing relationship with our London market customers while continuing to build on our longstanding relationship with LCH.Clearnet.”
Under the NYSE Liffe Clearing arrangements, Liffe will continue to outsource the existing clearing guarantee arrangements and related risk functions to LCH.Clearnet, which will remain responsible for defaulting member positions and applying its rules and resources to resolve defaults, if they occur.
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