Supporting Middle East innovation and the Lebanese capital markets reinvigoration
Beirut, London, UK, 5 July 2017.. Midclear S.A.L., the Custodian and Clearing Center of financial instruments for Lebanon and the Middle East, has selected GMEX Group wholly owned subsidiary, GMEX Technologies, to provide and implement its innovative AvenirClear CCP product as the core system of the first derivatives central counterparty (CCP) in Lebanon. The set-up of the CCP by Midclear represents an important milestone in the reinvigoration of the Lebanese Capital Markets, part of Lebanon’s strategic plans for its economy and reconstruction. The derivatives asset classes covered include FX Futures, Equity Index Futures & Options, and Commodity Futures, including precious metals.
Since the inception of the Capital Market Authority (CMA), led by the Central Bank of Lebanon, important work has been carried out by the CMA to draw up the financial market rules and regulations to best international standards, paving the way for a strong capital markets development in the region. The addition of a CCP will ensure the efficiency and effectiveness of the operations in this market, and provide safeguards for members, traders and investors.
AvenirClear CCP provides Midclear with an advanced real time risk management, and clearing and settlement platform that is fully compliant with the CPMI-IOSCO Principles for Market Infrastructures (PFMIs). Compliance with these principles is part of the Qualifying Central Counterparty (QCCP) criteria, and is recognised as the highest global standard for managing risk and communication in in the industry.
Hirander Misra, Chairman & CEO of GMEX Group, commented, “We are delighted to be working with Midclear to implement the AvenirClear CCP solution across multiple asset classes including options and excited to be supporting the development of the capital markets in Lebanon.” He added, “GMEX Group works in partnership with clients using agile project management. Our ability to deliver robust solutions within tight timeframes is key for market infrastructure decision makers.”
Fouad El Khoury, CEO of Midclear, stated, “The AvenirClear CCP solution and the business knowledge and flexibility of the GMEX team in meeting our requirements are important to us. The Derivatives CCP will be a key piece in the future landscape of Lebanese capital markets and it will need to meet all international standards.”
Media Contact for GMEX:
The Realization Group
Phone: +44 (0)7974 937 970
Note to editors
There are three pillars to QCCP status – to obtain it a CCP must meet the following criteria:
- Be licensed to operate as a CCP;
- Be regulated according to the CPMI-IOSCO Principles for Market Infrastructures (PFMIs);
- The CCP, bank, supervisor or other body with access to the required data, must make a calculation of three parameters (KCCP, DFCM, and DFCCP ) in such a way to permit the supervisor of the CCP to oversee those calculations, and it must share sufficient information of the calculation results to permit each clearing member to calculate their capital requirement for the default fund and for the bank supervisor of such clearing members to review and confirm such calculations.
- KCCP is a hypothetical capital requirement for a CCP for the sole purpose of determining the capitalisation of clearing member default fund contributions
- DFCM is the contribution of the clearing members to the default fund
- DFCCP is the contribution of the CCP to the default fund
The CMPI-IOSCO PFMIs (http://www.bis.org/cpmi/publ/d101a.pdf) provide a list of principles and detailed recommendations on how best to operate a financial market infrastructure, such as a CCP. There are 24 principles in total of which 22 apply to CCPs. The conformance of the CCP in meeting all of these 22 are essential in obtaining QCCP status and the CCP must be fully observant or broadly observant in all of these principles (or have agreed to remedial action if not) to obtain the QCCP status. A regulator, once having given the status, will periodically check that the QCCP continues to observe all the relevant principles.
About Midclear S.A.L.
Midclear S.A.L. the Custodian and Clearing Center of financial instruments for Lebanon and the Middle East. Midclear S.A.L. was established to address a variety of operational and risk issues related to the safekeeping and physical settlement of financial instruments in general. Midclear’s Members are:
- The Central Bank of Lebanon
- Local and Foreign Banks
- Local and Foreign Financial Institutions
- Foreign Central Securities Depository and Clearing Houses
Form of the company
Midclear is a Lebanese joint stock company with a capital of 2.8 Billion LBP, established and governed by the provisions of the Lebanese Commercial Code and other regulations in force in the Lebanese Republic. It has been mandated that the Central Bank of Lebanon shall continue to be the holder of not less than 75% of the company’s capital as specified in the Articles of Incorporation.
The Central Bank of Lebanon owns 99.79 % of Midclear’s Capital.
Object of the company
The establishment of Midclear comes with concerted efforts aimed at confirming the confidence of Lebanese, Arab and foreign investors. Its emergence is also congruent with the international recommendations proposed by the group of thirty on the matter of regulating and developing the financial markets. Midclear provides investors with a variety of depository and clearing services which confirm to international standards recommended by the Group of Thirty.
About GMEX Group Limited
GMEX Group is a set of companies that offer sustainable and innovative solutions for a new era of global financial markets. Providing business expertise, the latest technology, connectivity & operational excellence delivered through an aligned partnership driven approach. We use our extensive market infrastructure experience and expertise to create an appropriate strategic master plan with exchanges, clearing houses, depositories, registries and warehouse receipt platforms.
Our key business solutions enable the creation and operation of cost effective electronic exchanges and post trade infrastructure in multiple asset classes including equities, debt, FX, derivatives and commodities. We operate in both developing and developed markets through the establishment of cohesive business and technology ecosystems. GMEX offers the added benefit of interconnection to multiple partner exchanges, to create global networks of liquidity.
GMEX Group: ensures a cohesive strategic direction is maintained
GMEX Technologies: provides a single point of contact, incorporating account management and commercial & contractual services for all client and partner activities
GMEX Innovation: delivers technologically advanced product solutions for exchange trading and clearing & settlement.
GMEX Services: supplies strategic consultancy, implementation services and global support. This includes exchange business, product and technology strategy, project management and pre- and post- implementation support.
GMEX Investments: enables selective seed and early stage strategic investments into market infrastructure and related FinTech companies.