VIA CFTC Portal

Mr Christopher Kirkpatrick

Commodity Futures Trading Commission

1155 21st Street NW

Three Lafayette Centre

Washington DC 20581

11 February 2021

LCH Limited Self-Certification: Accommodation Fee for Non-Cash Collateral held in 

SwapClear Client Accounts

Dear Mr Kirkpatrick:

Pursuant to CFTC regulation §40.6(a), LCH Limited (“LCH”), a derivatives clearing 

organization registered with the Commodity Futures Trading Commission (the “CFTC”), is 

submitting for self-certification changes to its rulebook which will take effect on or after 

March 1, 2021.

Part I: Explanation and Analysis

LCH accepts securities collateral from its Clearing Members, for the satisfaction of margin 

requirements. LCH will introduce an accommodation fee to cover the costs of, and to 

support the ongoing investment in, services related to non-cash collateral held in SwapClear 

client accounts. 

The accommodation fee will apply at a rate of 1.5 basis points per annum to the value of noncash collateral posted bilaterally or by triparty mechanism to SwapClear client accounts to 

cover margin requirements. The fee will not be charged on excess, unutilised holdings to 

promote prudent margin management. 

The accommodation fee will apply to non-cash collateral held in all types of SwapClear client 

accounts, irrespective of whether they are held by SwapClear clearing members or FCM 

SwapClear clearing members.

Part II: Description of Rule Changes

As this fee is for non-cash collateral held in SwapClear client accounts, this change requires 

an amendment to the FCM Procedures to remove the comment that accommodation 

charges are only applicable to proprietary accounts of FCM Clearing Members. 

The changes to the rulebook are included in Appendix I in black line form
Part III: Core Principle Compliance

LCH reviewed the proposed rule changes against the requirements of the Core Principles and 

finds it will continue to comply with all the requirements and standards set forth therein. 

Specifically, this rule change has potential relevance to Core Principle (L) – Public Information. 

LCH has communicated this fee change to its membership and the new charges will be 

available on LCH’s public website under “LTD Fees on Collateral”. Market participants can 

therefore make an informed decision about using LCH’s services following this change. As a 

result, LCH believes that this change is consistent with the requirements of Core Principle L on 

public disclosure under Commission Rule 39.21(c).

Part IV: Public Information

LCH has posted a notice of pending certification with the CFTC and a copy of the submission 

on LCH’s website at: 

http://www.lch.com/rules-regulations/proposed-rules-changes

Part V: Opposing Views

There were no opposing views expressed to LCH by governing board or committee members, 

members of LCH or market participants that were not incorporated into the rule.

Certification

LCH hereby certifies to the Commodity Futures Trading Commission, pursuant to the 

procedures set forth in the Commission regulation § 40.6, that attached rule submission 

complies with the Commodity Exchange Act, as amended, and the regulations promulgated 

there under.

Should you have any questions regarding this submission please contact me.

Yours sincerely

Julian Oliver

Chief Compliance Officer

LCH Limited
Appendix I

FCM Procedures
FCM PROCEDURES OF THE CLEARING HOUSE

LCH LIMITED
FCM Procedures Financial Transactions

- 228 -

December 2020

interest rate without the consent of such SwapClear Clearing Members and/or 

FCM Clearing Members.

If the Clearing House chooses an alternative interest rate for purposes of 

calculating Price Alignment Amount pursuant to the immediately foregoing 

paragraph it shall notify all SwapClear Clearing Members and FCM Clearing 

Members in writing by delivering a Rate Change Notice.

3.5.3 Interest Structure

Application of 

Collateral Type of Collateral

Securities Cash

Foreign 

Cash Forward Cash

Initial margin 

after offset

Accommo

dation 

Charge 

Payable

Pay 

relevant 

rate

pay 

relevant 

rate of 

Collateral 

currency No charge or payment

Excess or 

Surplus

No charge 

or payment

Pay 

relevant 

rate

Pay 

relevant 

rate No charge or payment

Note:

1 “Foreign Cash” means cash in a currency other than that of the liability.

2 “Forward Cash” means cash which has been credited to an account for later value (e.g., 

an amount called via PPS for next-day value).

3 This Section 3.5.3 only applies to Proprietary Accounts of FCM Clearing Members.

34 Applicable Accommodation Charges are available on the Clearing House’s website.

3.5.4 Payment of Interest and Charges

Interest, PAA and accommodation charges are charged monthly, from the first 

calendar day to the last calendar day of the current month. Interest and 

accommodation charges are calculated on a daily basis and the resulting 

monthly total is posted to FCM Clearing Members' cover accounts for value at 

close of business on the second business day of the following month. A VAT 

invoice is also issued on the third business day of each month detailing, PAA

the interest and accommodation charges applicable for the previous month. 

Separate invoices are issued for each currency which can be found on the 

Member Reporting Website.

VAT is charged where relevant, dependent on contract and accommodation 

charges, at current rates. On foreign currency amounts VAT is charged in 

sterling on the converted value of any relevant charges. The sterling Collateral 

account shows separate postings for sterling VAT amounts arising from foreign 

currency charges.

The net invoice value for each currency is posted to the relevant Collateral 

account for value on the second working day of the month succeeding the month 

in which the charges arose.