LCH accepts offshore yuan-denominated Chinese Government Bonds as eligible collateral

LSEG said on Wednesday that its clearing house LCH has begun accepting offshore yuan-denominated Chinese Government Bonds (CGBs) as eligible non-cash collateral.

Driven by market demand globally, the addition of offshore yuan-denominated CGBs further broadens LCH’s eligible collateral framework as clearing members look for greater flexibility and optionality in how margin requirements are met, it said.

Under the new framework, offshore yuan-denominated CGBs are accepted on a bilateral basis, with settlement through Euroclear Bank. Previously, LCH began accepting CGBs denominated in euros and US dollars.

LCH chief executive Susi de Verdelon said that the move marks an important step in the evolution of its offering for global members and their customers, and LCH looks forward to continuing to evolve its capabilities to support them as their participation in central clearing grows.

"By incorporating CGBs into LCH's collateral framework, the clearing costs for derivatives market participants are significantly reduced, and capital efficiency and asset liquidity are greatly enhanced," said  Xu Lei, deputy chief executive of ICBC (Asia).

BOC Hong Kong (2388) also said it has successfully deposited offshore yuan-denominated CGBs into its clearing account at LCH on Wednesday, while concurrently assisting clients in completing their collateral deposits.

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