LSEG streamlines post-trade efficiency across cleared and uncleared markets

As regulation and market fragmentation drive demand for more efficient post-trade processes, LSEG representatives outline how the group’s Post Trade Solutions business is extending clearing-style efficiencies to bilateral markets and helping clients across the Asia-Pacific (Apac) region navigate rising margin and risk-management pressures

Market volatility, regulatory reform and the shift towards greater automation are reshaping the post-trade landscape. To help institutions better manage counterparty and operational risk in this environment, LSEG has connected the dots between a part of its suite of post-trade businesses with the launch of Post Trade Solutions  – including Acadia, Quantile, SwapAgent and TradeAgent – delivering unified infrastructure aimed at cutting costs, optimising balance sheet use and reducing operational friction across cleared and uncleared markets.

Andrew Williams, chief executive of Post Trade Solutions at LSEG, outlines the group’s vision for bringing the benefits of clearing to bilateral trades; Hiroki Tomiyasu, LSEG’s head of Post Trade Japan and head of Post Trade Solutions, Apac, highlights how the company is adapting these solutions to address the specific risk and regulatory challenges in the region.

Extending clearing benefits to the uncleared market

Andrew Williams, LSEG

“The high-level vision is about bringing the benefits of clearing to the uncleared space,” says Williams. “For years, we focused mainly on clearing, but a material part of the over-the-counter [OTC] derivatives market will remain uncleared – not every product nor every counterparty fits neatly within the cleared space. The goal is to bring together complementary services that reduce balance sheet and operational costs, and to apply central processing principles to achieve the efficiency clients and the market are looking for.”

Williams argues that, while clearing has long provided risk and operational advantages through centralised record-keeping and processing, similar benefits can be extended to bilateral trades without requiring a central counterparty (CCP). “The real benefit of clearing isn’t just counterparty risk reduction – it’s the centralised processing, a single golden source of trade data, the automated computation of valuations and cashflows, as well as the efficient settlement of payments,” he explains. “We believe many of those operational efficiencies can also be achieved in the uncleared market, without the need for a CCP.”

Building an integrated post-trade ecosystem

The integration of some of LSEG’s post-trade businesses under Post Trade Solutions has been a multiyear effort. SwapAgent, Quantile and Acadia now operate as core pillars of a joined-up model, which spans the full spectrum of OTC derivatives.

“SwapAgent is a platform for uncleared derivatives where we centrally calculate relevant margin and cashflow, holding a golden record of each trade – very much like a CCP but without being the CCP,” Williams says. “Meanwhile, Acadia processes collateral workflows, and Quantile gives us the ability to optimise risk across portfolios – whether cleared, uncleared or SwapAgent – helping clients reduce exposure and rebalance risk.”

Operating central infrastructure requires the trust and resilience expected of a financial market infrastructure – a role LSEG is privileged to hold

Andrew Williams, LSEG

The integration of these businesses creates what Williams describes as a “comprehensive post-trade infrastructure” that can cover the entire OTC portfolio and automate key risk management processes. “Ultimately, our aim is to make optimisation and balance sheet management seamless and automated,” he adds. “The goal is for these processes to operate on a daily cycle, so risk management becomes continuous rather than periodic.”

This vision is underpinned by LSEG’s long-standing position as a trusted market infrastructure provider. “Being part of LSEG is fundamental to realising our vision,” Williams says. “The group has deep, long-term relationships across the entire market – from global banks to the buy side – which means we can build consensus more easily and test our ideas with clients.”

That network, he adds, also underpins client confidence in LSEG’s ability to deliver transformation on a multiyear horizon: “Clients need to know we’ll be there next year and the year after, because much of what we’re doing involves long-term change. Operating central infrastructure requires the trust and resilience expected of a financial market infrastructure – a role LSEG is privileged to hold.”

The efficiency imperative

As regulatory and capital pressures persist, efficiency remains the central theme driving LSEG’s post-trade road map. “The biggest driver for us is efficiency – both capital and operational,” says Williams. “Banks want to be more capital-efficient, balance sheet-efficient, margin-efficient. Our services are aimed squarely at reducing capital, margin and balance sheet while building scalable, automated processes to achieve those outcomes operationally.”

The roll-out of the standardised approach to counterparty credit risk has heightened those priorities, particularly in markets such as foreign exchange, where balance sheet consumption can be heavy. “The general theme hasn’t changed – but it’s intensifying,” Williams says. “After the financial crisis that began in 2007–08, capital requirements went up significantly, and new regulations continue to sharpen the focus on efficiency.”

Apac’s unique market and margin pressures

While the global drivers of efficiency and automation are universal, the Apac region presents unique structural and regulatory challenges. “In Asia, markets tend to be more directional and concentrated – that creates very specific risk management challenges,” explains Tomiyasu.

Hiroki Tomiyasu, LSEG

Tomiyasu, who joined LSEG from the banking sector earlier this year, points to the region’s heavy concentration of US dollar funding and FX hedging as a key source of systemic sensitivity. “Institutions such as Japanese banks, life insurers, Australian superannuation funds and sovereign wealth funds all hold US dollar assets and need FX hedges,” he says. “That creates wrong-way risk for global dealers, who have become increasingly reluctant to provide liquidity. As a result, risk optimisation and margin efficiency are critical for Asian market participants.”

The gradual roll-out of margin rules across the region is amplifying this pressure. “Japan is already fully implemented, but India, Indonesia and China are catching up, while there is still work to do in Korea,” says Tomiyasu. “As margin regulations expand, margin calls are becoming more frequent and operationally demanding. That’s why LSEG’s Margin Manager service is so important – it helps clients manage the growing complexity.”

To meet that demand, LSEG has been expanding its footprint across the region. “We’ve increased headcount in the Apac region significantly, with new hires in Tokyo, Singapore and Manila,” Tomiyasu notes. “We’re now better able to support clients during local hours and have even introduced an Asia time-zone-friendly compression and optimisation service – the first of its kind – following a successful proof of concept in July.”

Integrated support tailored to Asia’s post-trade needs

Against this backdrop of regulatory change and growing market complexity, Tomiyasu says the strength of LSEG’s regional strategy lies in its ability to connect all elements of the post-trade process. “Because we have SwapAgent, Quantile and Acadia under one roof, we can offer a single, streamlined process for optimisation and margin management,” he explains. “Clients in Asia don’t need to adjust their existing workflows – we can take data directly from Acadia, with client consent, and run initial margin optimisation across cleared and bilateral positions.”

We’re now better able to support clients during local hours and have even introduced an Asia time-zone-friendly compression and optimisation service – the first of its kind – following a successful proof of concept in July

Hiroki Tomiyasu, LSEG

That integrated model, he adds, is particularly powerful in FX derivatives, where activity is expanding rapidly across the region. “We see strong non-deliverable forward [NDF] activity in Taiwan, Korea, India and China,” says Tomiyasu. “We can selectively clear those NDFs through LCH’s ForexClear, or use them to reduce initial margin requirements.”

With LSEG also providing trading and reporting tools – including Tradeweb and Regulatory Reporting Solutions – he says clients can access support “across the full trading lifecycle, from pre-trade to post-trade, in one integrated framework”.

Managing fragmentation and complexity

That integration is critical in a region as diverse as Apac, where fragmented markets and multiple clearing systems create additional layers of complexity. Tomiyasu notes that the yen swap market alone has grown almost eightfold in the past three years, while firms must navigate differences between local and global CCPs, interest rate benchmarks and onshore/offshore FX markets. “Efficient risk and resource management in such a fragmented environment is difficult, and that’s where our optimisation and margin tools become invaluable.”

He adds that Asian market participants tend to have genuine hedging needs rather than speculative exposures, meaning their trades are long-dated, sticky and capital-intensive. “For life insurers and pension funds, managing scarce resources such as funding cost and capital cost is critical,” he says. “Our solutions allow them to move risk efficiently across counterparties without disturbing their existing hedge accounting. That’s a big advantage for clients in this region.”

Driving post-trade efficiency across Asia and beyond

By linking its global infrastructure with regional expertise, LSEG enables clients to manage risk more efficiently across cleared and uncleared markets. From automating margin and portfolio optimisation to streamlining NDF clearing in Asia, the group reduces operational friction, lowers balance sheet usage and simplifies compliance with evolving regulations. This integrated approach equips institutions to respond quickly to market and regulatory changes while laying the groundwork for further innovation.

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