The largest clearing house in Europe, LCH.Clearnet, has selected Tata Consultancy Services (TCS) Financial Solutions Bancs product as the underlying system for its multi-asset derivatives clearing platform.
The deal comes at a time when the high-profile default of Lehman Brothers, a key player in the European derivatives market, has led LCH.Clearnet to enact an action plan in order to unwind the stricken bank's various positions.
Under the terms of the deal, LCH.Clearnet will work with TCS, the technology consulting arm of India-based business giant Tata, on developing an updated version of its Synapse Clearing Technology derivatives platform that will be able to add new products and markets.
The more pressing concern for LCH.Clearnet, however, will be the unravelling of Lehmans' positions on numerous off-exchange markets where LCH.Clearnet is the principal clearing facility.
Lehmans was a member of LCH.Clearnet's RepoClear system for repurchase agreements, as well as Swapclear, its facility for clearing over-the-counter swaps.
While LCH.Clearnet has said that it has a process in place for such defaults, the longer term impact of Lehman's default and the demise of the investment banking industry in general could well be significant for the clearing industry as a whole and particularly as regards the clearing of over-the-counter derivatives.