What Was the International Commodities Clearing House (ICCH)?
International Commodities Clearing House (ICCH) was an independent clearing house that preceded the London Clearing House Ltd (LCH) in the U.K. LCH provides clearing or central counterparty services in several markets. The organization existed as the ICCH from 1971-1992 when the ICCH divested its clearing software business to Sungard and renamed it to the LCH. in 2003, LCH merged with Clearnet Group, dropping the Clearnet brand from its name in 2016.
Today, the LCH offers clearing and risk management services for a diverse range of asset classes.
- The International Commodities Clearing House (ICCH) was a U.K.-based financial consortium that offered clearing services for futures contracts in coffee, sugar, and other soft commodities.
- In 1992, the ICCH became part of the London Clearing House, Ltd. (LCH), which continues to exist to this day.
- The LCH specializes in clearing transactions in forex, repos, equities, commodities, non-deliverable forwards, and swaps.
Understanding the International Commodities Clearing House
Now that the International Commodities Clearly House no longer exists, the LCH assumes the counterparty risk when two parties trade, guaranteeing the settlement of the trade. To mitigate risk, it imposes minimum requirements on members and collects initial and variation margin or collateral for executed trades.
LCH's members include most major investment banks, broker-dealers, and international commodity houses. Oversight is by the national securities regulator or central bank in each jurisdiction in which LCH operates.
International Commodities Clearly House History and Functions
The London Produce Clearing House Ltd., or LPCH, was established in 1888 and became the ICCH in 1971. In 1988 a consortium of six British banks assumed ownership. In 1992, ICCH divested its clearing software business and was renamed LCH Ltd. Its roots go back to the London Clearing House, established in 1888, and the Paris-based Clearnet, established in 1969. Both began by clearing commodity transactions. They merged in 2003 and the London Stock Exchange Group acquired a majority stake in the business in 2012. LCH Group now consists of LCH Ltd and LCH SA.
LCH operates an open-access model with a choice of execution venues. LCH Ltd is the group’s UK-registered clearing house. It has clearing services for rates, foreign exchange, swaps, repurchase agreements, (repos), fixed income, commodities, cash equities, and equity derivatives products. Clearing services within LCH Ltd. include SwapClear, ForexClear, RepoClear Ltd., EquityClear Ltd., CommodityClear Ltd., and LCH’s cleared listed rates business.
LCH SA is the group’s France-registered clearing house. It has clearing services for credit default swaps, or CDS, repos and fixed income, commodities, cash equities, and equity derivatives. Clearing services within LCH SA include CDSClear, RepoClear SA, EquityClear SA, and CommodityClear SA.
SwapClear is a global clearing service for OTC interest rate swaps and clears a majority of the global notional market. ForexClear covers the most actively traded currencies in the marketplace. LCH’s RepoClear is the first multi-market centralized clearing and netting facility for European government repo and cash bond markets. EquityClear is for equities and equity equivalents such as ETFs, exchange-traded commodities, REITS, and exchange-traded bonds.
LCH clears equity-based trades that are executed on the London Stock Exchange, SIX Swiss Exchange, BATS Chi-X Europe, NYSE Euronext, Bourse de Luxembourg, and Equiduct. CommodityClear provides clearing and settlement services for the exchange-traded and the over the counter commodity markets. CDSClear provides full multilateral clearing, reduced counterparty risk, and post-trade anonymity and encompasses the core requirements as determined by key industry and policy groups.