Yen swaps users stuck in clearing Catch-22

Lack of access to client clearing at JSCC poses problems for US buyers of Japanese government bonds

Yield-starved bond investors in the US are hoovering up Japanese government debt. But there’s a hitch: financing the trade involves long-dated yen interest rate swaps, and the preferred clearing house for these swaps, the Japan Securities Clearing Corporation (JSCC), is off limits for many US investors.

Instead, clients must clear their trades at rival clearing house LCH, where liquidity is patchier and prices are sometimes higher for comparable swaps.

Experts say the problem is likely to

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