UOB Becomes First Global Member of LCH SwapClear and ForexClear

United Overseas Bank (UOB) has achieved a significant milestone by becoming the first global member to join both LCH SwapClear and ForexClear as a direct clearing member. This move is particularly noteworthy in the Asia Pacific region, as UOB, headquartered in Singapore, is the first bank from Southeast Asia to join ForexClear directly, and it also marks the final local Singapore banking group to become part of SwapClear.

On Tuesday, UOB successfully cleared its initial Interest Rate and FX Derivative trades as a direct member. This development enhances LCH’s footprint in the Asia Pacific, which now boasts 15 direct members and over 170 clients. The expansion reflects considerable growth for LCH SwapClear and ForexClear in the region, with year-on-year increases of 24% and 41%, respectively, in the number of trades cleared.

SwapClear is known for providing access to substantial liquidity in the over-the-counter interest rate swap market, encompassing 95% of the standard interest rate swap transactions. Meanwhile, ForexClear offers capital, margin, and operational efficiencies for both deliverable and non-deliverable foreign exchange.

LCH’s growth in the Asia Pacific has been substantial. Since 2021, the SwapClear platform has recorded an 80% growth in notional cleared currencies, while ForexClear has experienced a 14% increase in the same metric during this period.

Isabelle Girolami, CEO of LCH Ltd, expressed her enthusiasm for UOB’s membership, underscoring the Asia Pacific region as a vital strategic market for LCH. She highlighted their commitment to enabling members to leverage economies of scale alongside margin, capital, and operational efficiencies.

Leslie Foo, Group Head of Global Markets at UOB, views their collaboration with LCH as a means to enhance liquidity across various asset classes. He pointed out that heightened regulatory demands have increased financial resource requirements across their portfolios, and UOB will gain significantly from LCH’s risk management solutions and the resultant efficiencies in capital and margin for their rates and FX clearing.

Central clearing remains a crucial priority for financial institutions in the Asia Pacific as they strive to optimize risk management and capitalize on efficiency. In the fourth quarter of 2023, the London Stock Exchange Group is set to launch a new Non-Deliverable Forward (NDF) matching platform in Singapore, marking the integration of clearing into the FX trade execution process for the first time.

Recent data highlights UOB’s robust financial standing, with a market capitalization of approximately 34.42 billion USD and a low price-to-earnings ratio, reflecting its strong value proposition. The bank has shown remarkable revenue growth, with a 36.32% increase in the last twelve months, bringing total revenue to around 9.43 billion USD. This remarkable performance aligns with insights pointing to UOB’s rapidly accelerating revenue trajectory.

Despite facing challenges like declining gross profit margins, UOB has maintained a steady commitment to its shareholders, having paid dividends for 32 consecutive years with a current yield of 5.78%. This consistent dividend policy showcases the bank’s resilience.

Moreover, UOB’s stock is noted for its low price volatility, suggesting it could be a stable investment option. The bank is also anticipated to remain profitable this year, continuing the positive trend seen over the last year, which bodes well for prospective investors.

This overview provides a snapshot of the latest developments and offerings for those interested in UOB and the broader financial landscape.