Global technology solutions platform GLMX Technologies has completed an integration with LCH鈥檚 Paris-based subsidiary LCH SA to support classic and sponsored clearing for European repo.
As part of the mandate, clients will have access to the GLMX platform which aims to enhance liquidity access.
Mutual clients of the two firms will benefit from the move, the businesses say, namely GLMX鈥檚 client base of more than 115 global firms, and more than 20 third-party order management systems (OMS) and execution management systems (EMS).
Industry utilities, including triparty agents and central clearing counterparties, will also benefit.
GLMX is a global technology solution for trading money market instruments, including repo and securities lending transactions. Founded in 2010, the dealer to buy-side securities finance trading firm has more than US$1.7 trillion in daily balances. These balances represent the trading activity of global financial institutions that utilise GLMX technology to negotiate and execute securities financing transactions (SFTs).
The 鈥渟earch for liquidity鈥� has become a catalyst for this recently announced integration, according to GLMX鈥檚 CEO Glenn Havlicek. He continues: 鈥淎s a result, the markets in which we operate contain a number of connections among participants, vendors and other key market infrastructure providers. A valuable component of the service GLMX provides to our clients is seamless integration between them and the wider ecosystem.鈥�
GLMX is working 鈥榗ontinuously鈥� to refine the technical architecture of the platform to support increasing demand for connectivity to multiple liquidity pools within the broader securities finance ecosystem. The firm has had to make minor technical adjustments to the existing link it has in place with LCH for sterling sponsored clearing to accommodate the integration. In addition, GLMX worked closely with LCH SA to ensure that its work met the clearing house鈥檚 technical and operational requirements.
Central clearing reduces capital costs, mitigates credit risk and generates liquidity, which are priority concerns for securities finance participants. Havlicek anticipates that the significance of central clearing will continue to grow in the face of current global regulatory commitments. He adds: 鈥淥ur connection to LCH SA鈥檚 powerful central clearing capability is an important step as GLMX establishes itself as the nexus of deep liquidity pools for our rapidly growing European buy- and sell-side network.鈥�
Olivier Nin, head of RepoClear and calm risk at LCH SA, indicates that through this integration, buy-side members can benefit from greater access to the Euro liquidity pool, 鈥渨hile banks can leverage enhanced netting opportunities, operational efficiencies and alleviate balance sheet pressures鈥�.
鈥淲e see sponsored clearing as one of a number of tools available to our user community. Its usage will be a function of client needs and wider market evolution, especially around regulation, capital requirements and costs,鈥� Havlicek notes.
Referencing the Depository Trust & Clearing Corporation鈥檚 (DTCC鈥檚) Fixed Income Clearing Corporation (FICC) solution for sponsored repo clearing, and drawing lessons from this activity in the US, Havlicek says: 鈥淭he DTCC FICC sponsored model is different in certain respects, but the significant flows which that model has attracted demonstrate the appetite for efficient solutions to capacity constraints within what is an existentially critical market.鈥�
Looking forward to the further development of the company, GLMX indicates that it has experienced 鈥渆xponential annual growth鈥� on its platform over the past several years, which shows 鈥渘o sign of abating鈥� as the firm鈥檚 daily outstanding balances surpass US$1.8 trillion. The company aims to continue building innovative functionality to ensure clients can benefit from user-friendly and well-integrated technology.
In his concluding thoughts, Havlicek says: 鈥淲e see tremendous potential to apply the same playbook to key adjacent markets 鈥� our fixed income securities lending offering continues to gain traction 鈥� and we will continue to invest in securities-based lending in the coming year. In addition, our nascent money market offerings are showing particular promise.鈥�
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