UK clearing house LCH has made regulated investment funds eligible for sponsored clearing through its RepoClear service in a move that could cut post-trade costs for fund managers.
Buy-side use of sponsored clearing has increased in recent years as fund managers look for more direct connections to clearing houses rather than relying on clearing brokers and other intermediaries.
Examples of eligible fund structures include authorised designated investment companies, unit trusts and common contractual funds.
Global head of securities and collateral at LCH Bruce Kellaway has described the move as “a significant development for the UK fixed income market” that will enable buy-side participants to access “repo capacity, maximise pricing and balance sheet efficiencies and ultimately optimise their risk management”.
UK-based Insight Investment, the first fund manager to clear repo through the sponsored model back in 2017 on behalf of a UK pension fund, is also the first firm to go live with the additional funds.
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