Clearing house LCHClearnet is now offering inflation swap clearing through its leading SwapClear service. 

Expanding the range of derivatives eligible for clearing will allow market participants trading UK, European, and US inflation-linked products to benefit from the efficiencies and enhanced risk management associated with central clearing.

“After thorough risk reviews and testing, we are proud to be the first central counter party to secure regulatory approval under both the European Market Infrastructure Regulation and US Commodity Exchange Act regulatory frameworks for inflation swaps clearing," said Nathan Ondyak, head of products and markets, SwapClear, LCHClearnet. 

"Clearing this new product, which shares structural similarities with other cleared interest rate derivatives, is a significant move for the market and underlines our commitment to providing safe and innovative risk management services to our members and their clients.”

Trading in inflation-linked swaps is popular among asset managers and pension funds looking to guard against rises in inflation and interest rates. 

Firms opting to clear inflation swaps through SwapClear are able to offset their margin requirements with correlating interest rate derivatives cleared at LCHClearnet.

“Risk management is a top priority for fund managers. Central clearing significantly mitigates counterparty risk and we welcome industry moves to provide clearing services for inflation swaps,” said Simon Wilkinson, head of liability driven investment funds at Legal & General Investment Management.