The clean-up in the aftermath of Lehman Brothers' collapse reached a milestone on Tuesday when LCH.Clearnet, Europe's largest independent clearer, said it had transferred almost all of the trading positions of the failed bank's clients to other banks.
The move means that clients such as hedge funds can now unwind those positions or trade them as they wish.
It is also a sign that one of the largest clearers has, in the space of just over a week, managed down the main risks associated with the Lehman default without any disruption to markets and without having to resort to using the clearer's main default fund.
Roger Liddell, LCH.Clearnet chief executive, said: "This is the most complex and challenging default in our history. Our success in managing the default demonstrates the robustness of our risk management procedures and the strength of our relationships with key market participants."
The positions that LCH.Clearnet has transferred relate to trades done by Lehman on behalf of clients in the futures and options markets on Liffe, the London-based futures exchange owned by NYSE Euronext.
Almost all positions that clients had through Lehman had been transferred to other broker-dealers. The equity and energy portfolios of Lehman exchange-traded derivative positions had been sold through a sealed bid process, the clearer said.
LCH.Clearnet is also the clearer for the London Stock Exchange, where Lehman was the largest single bank broker-dealer provider of order flow.
Mr Liddell said the clearer had managed the liquidation of the whole Lehman equities portfolio.
"Equity positions have been closed out and are being settled as appropriate," LCH.Clearnet said.
Lehman's positions and those of its clients on US exchanges are subject to different treatment, with Lehman under Chapter 11. Eurex Clearing, the large Frankfurt-based clearer, has worked through most of its issues with the Lehman default, sources said.
Lehman administrators are also working to settle over-the-counter (OTC) trades where, without an exchange as a counterparty, settlement has to be reached on a bilateral basis.
PwC has proposed a form of standardised solution with a number of Lehman's biggest counterparties, co-ordinated by Morgan Stanley, that would enable it to sort through great swathes of outstanding trades in a single effort.
But both sides are currently far from agreement, according to sources briefed on the negotiations.