An LSEG Business

LCH | 10 Paternoster Square | London EC4M 7LS | T: +44 (0)20 7426 7000 | F: +44 (0)20 7426 7001 | lch.com

LCH Group Holdings Limited | LCH Limited | Banque Centrale de Compensation | LCH.Clearnet LLC

LCH Limited. Registered in England No. 25932 Registered Office: 10 Paternoster Square, London, EC4M 7LS

VIA CFTC PORTAL

29th March 2023 

Mr. Christopher Kirkpatrick

Commodity Futures Trading Commission

1155 21st Street NW

Three Lafayette Centre

Washington, DC 20581

LCH Limited Self-Certification: Changes to fix broken web links in LCH Rulebook

Dear Mr. Kirkpatrick, 

Pursuant to Commodity Futures Trading Commission (“CFTC”) Regulation §40.6(a), LCH Limited 

(“LCH”), a derivatives clearing organization registered with the CFTC, is submitting for selfcertification changes to its rulebook required to fix, remove, or amend broken website links and 

contact details.

Part I: Explanation and Analysis 

LCH’s rulebook covers the clearing house’s general regulations, default rules, settlement finality 

regulations, sponsored clearing regulations, and procedures. This resource is used by members 

and clients as a reference point to understand their obligations to the clearing house. Each of the 

rulebook parts contains numerous web links to the LCH website, many of which have become 

outdated as content and pages have been altered across the services. 

LCH proposes to alter or remove several of these broken web links and to replace them with more 

generic references where appropriate to avoid future situations whereby the links become 

unusable, as well as updating departmental email contact addresses. This will impact all of LCH’s 

services, but there will be no operational changes to how LCH functions.

Part II: Description of Rule Changes

LCH will amend the following parts of the rulebook to replace or remove the broken web links:

• FCM Procedures

• Procedures Section 1 (Clearing Member, Non-Member Market Participant and Dealer

Status)

• Procedures Section 2D (EquityClear Clearing Service)

• Procedures Section 2I (ForexClear Clearing Service)
2 

• Procedures Section 3 (Financial Transactions)

• Procedures Section 4 (Margin and Collateral)

• Sponsored Clearing Procedures

Key changes are focused on sections of the procedures and regulations referring to Protected 

Payment System (“PPS”) banks, acceptable forms of collateral covers, fees, settlement 

procedures, reporting, and jurisdictional requirements. 

The form of the changes is principally removing specific URL reference to pages of the LCH 

website, and replacing them with more generic language including ‘available from the Clearing 

House on request’ and ‘available from the LCH website’. Where it was not suitable to entirely 

remove website links, they have been reviewed and updated as highlighted in the appendices. 

References to reporting have been amended to include direction to LCH’s member portal, and more 

general references to website pages have been removed where appropriate. LCH’s contact details 

(in the form of departmental email addresses) have also been updated.

Part III: Core Principle Compliance

LCH reviewed the proposed 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, these 

rulebook changes have potential relevance to Core Principle L under CFTC regulation §39.21 

(Public Information).

The changes described in this filing ensure that LCH meets the objectives of Core Principle L 

(§39.21) on Public Information, which requires DCOs to make information concerning the rules and 

the operating and default procedures governing the clearing and settlement systems of the 

derivatives clearing organisation available to market participants. Updating the website link 

references into a more standardised format will better enable LCH’s members and clients to find 

information and will negate the risk of users relying on outdated links, thereby increasing 

accessibility. 

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: https://www.lch.com/resources/rulebooks/proposed-rule-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.

Certification

LCH hereby certifies to the CFTC, pursuant to the procedures set forth in CFTC Regulation §40.6, 

that the attached submission complies with the Commodity Exchange Act, as amended, and the 

regulations promulgated thereunder.
3 

Should you have any questions please contact me at james.woolley@lseg.com.

Yours sincerely, 

James Woolley

Regulatory Compliance Analyst

LCH Limited
4 

Appendix I

FCM Procedures of the Clearing House LCH Limited

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FCM PROCEDURES OF THE CLEARING HOUSE

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approval process involving the Risk Committee and Board of the Clearing 

House.

1.7.2 Each FCM Clearing Member shall maintain current written risk management 

policies and procedures which address the risks that the relevant FCM 

Clearing Member may pose to the Clearing House, including any policies 

and procedures that the Clearing House may reasonably request to be 

incorporated therein. Upon the request of the Clearing House, an FCM 

Clearing Member shall promptly provide the Clearing House with a copy of 

its current policies and procedures for review by the Clearing House.

1.7.3 Pursuant to, and in accordance with, FCM Regulation 14 (Margin and 

Collateral), where an FCM Clearing Member provides clearing services to an 

FCM Client which the FCM Clearing Member considers to have a heightened 

risk profile, then that FCM Clearing Member shall collect from that FCM 

Client additional FCM Client Funds with a value that is 10 percent above the 

amount that the Clearing House would normally require for such FCM Client.

FCM Clearing Members are not required to furnish the Clearing House with 

the additional margin described in this section. However, for the avoidance of 

doubt, FCM Clearing Members are required to furnish the Clearing House with 

the Required Margin for every FCM Client.

1.8 Other Conditions

The Clearing House may, at any time, impose additional conditions in relation to 

continued FCM Clearing Member status, and at any time vary or withdraw any such 

conditions, provided that any conditions which restrict, or may be considered to have 

the effect of restricting, access of an FCM Clearing Member to the Clearing House 

shall be imposed only in circumstances where, and to the extent that, their object is to 

control the exposure of the Clearing House to risk. FCM Clearing Members are 

referred to the Clearing House's website for further information about the relevant 

internal risk management policies and procedures of the Clearing House. 

The relevant additional conditions imposed on an FCM Clearing Member may 

include, but are not limited to, a requirement to furnish additional cash or non-cash 

Collateral to the Clearing House, as determined by the Clearing House.

1.9 Other Conditions

1.9.1 Singaporean Clients

FCM Clearing Members are required to provide a copy of the ‘Notice to 

Singapore Clearing Clients’ to FCM Clients incorporated in or operating 

through a branch in Singapore. The ‘Notice to Singapore Clearing Clients’ is 

available here: http://www.lch.com/members-clients/members/fees-ltd/annualaccount-structure-fees from the Clearing House on request. 

1.9.2 Restrictions on Japanese FCM Clients
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(a) FCM Clearing Members shall not permit FCM Clients incorporated 

in or domiciled in Japan to participate in the Portfolio Margining 

Service.

(b) FCM Clearing Members shall not clear Yen-denominated FCM

SwapClear Contracts on behalf of FCM Clients incorporated in or

domiciled in Japan.

1.10 Prescribed Terms

Pursuant to FCM Regulation 7 the Clearing House may prescribe certain provisions

that an FCM Clearing Member must include in its agreement with an FCM Client.

Where an FCM Clearing Member provides FCM Clearing Services to an FCM Client

that is a registered investment company, as defined in the Investment Company Act of

1940, it shall include provisions in its agreement with that FCM Client to the

following effect:

(a) the FCM Clearing Member shall comply with Applicable Law relating to the

segregation of FCM Client Funds, including Part 22 of the CFTC Regulations;

(b) FCM Client Funds delivered by the FCM Client shall be held in accordance

with the CEA and the CFTC Regulations, and the FCM Clearing Member

shall obtain an acknowledgement, to the extent required by Parts 1.20 and 22

of the CFTC Regulations, that those FCM Client Funds are being held in

accordance with the CEA and the CFTC Regulations;

(c) the FCM Clearing Member will promptly furnish copies of or extracts from its

records or such other information pertaining to the FCM Client’s assets as the

Securities Exchange Commission, through its employees or agents, may

request;

(d) any gains on FCM Contracts held on behalf of an FCM Client (other than de

minimus amounts) may be maintained by the FCM Clearing Member only

until the next Business Day following receipt; and

(e) the FCM Client has the ability to withdraw its assets from the FCM Clearing

Member as soon as reasonably practicable if the FCM Clearing Member’s or

the Clearing House’s custody of FCM Client Funds no longer meets the

requirements of Rule 17f-6 under the Investment Company Act of 1940.
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(a) General – Intra-day Margining

Following an intra-day margin call (except as notified otherwise by an 

FX FCM at the time of an intra-day margin call), the Clearing House 

will deduct cash, in the appropriate currency, directly from the relevant 

FX FCMs PPS account to cover that intra-day margin call.

Cash payments in respect of intra-day Margin are accepted only in 

USD by the Clearing House.

Each FCM Clearing Member must ensure that it has sufficient cash 

funds in place with their PPS bank(s) in order to avoid any intra-day 

liquidity issues.

2.2.15 General Margining Process

A “Margin Run” is the process by which the Clearing House calculates an 

FX FCM's Initial Margin requirement (if any) and, during an EOD Margin 

Run, its Variation Settlement and Price Alignment Amount requirements

(together, its “Transfer Requirements”) and applies that FX FCM's Margin 

to satisfy the Transfer Requirements for that FX FCM in respect of the FCM 

ForexClear Contracts within that FX FCM's portfolio.

2.2.16 Types of Margin Runs

There are three types of Margin Run:

(a) ITD / Ad Hoc – Day Margin Run

ITD/Ad-hoc London daytime Margin Runs are initiated as and when 

dictated by the schedule published by the Clearing House and notified 

to FX FCMs from time to time (the “Schedule”) or as necessary, and 

are performed in the time period during which a PPS call can be made 

(the “ITD/Ad-hoc Day Margin Run”), which PPS time period is 

available from the Clearing House on request. PPS times are published 

on the Clearing House's website at: http://www.lch.com/riskcollateral-management/collateral-management/protected-paymentssystem.

ITD/Ad-hoc Margin Runs are calls in respect of Initial Margin only. 

Variation Settlement and Price Alignment Amounts are not included in 

ITD/Ad-hoc Margin Runs.

(b) EOD Margin Run

The EOD Margin Run is the final ITD/Ad-hoc Day Margin Run that 

completes by 24:00 hours, London time, on that business day (the 

“EOD Margin Run”).

EOD Margin Runs are calls in respect of Initial Margin as well as 

Variation Settlement, NSA and Price Alignment Amounts.
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(c) ITD / Ad Hoc - Night Margin Run

ITD/Ad-hoc London overnight Margin Runs are initiated as and when 

dictated by the Schedule or as necessary, and are performed in the time 

period during which a PPS call cannot be made (the “ITD/Ad-hoc 

Night Margin Run”).

ITD/Ad-hoc Night Margin Runs are calls in respect of Initial Margin 

only. Amounts that are anticipated to be owed in respect of Variation 

Settlement, NSA and Price Alignment Amounts may be considered in 

the determination of the amount of Initial Margin called in such

ITD/Ad-hoc Night Margin Run.

2.2.17 Margin Run Process

Margin Runs cover all registered FCM ForexClear Contracts with the status 

“NOVATED”.

Margin runs will be carried out for each FCM ForexClear Contract and FCM 

ForexClear Transaction (as the case maybe) until (and including) the later of:

(a) EOD Margin Run on the Settlement Date; or

(b) EOD Margin Run after the Settlement Rate is published.

During every Margin Run the Clearing House calculates the Initial Margin 

required and (where applicable) the Variation Settlement and Price Alignment 

Amounts required to cover each FX FCM's relevant open FCM ForexClear 

Contracts and FCM ForexClear Transactions (each a “Liability” and together 

the “Liabilities”).

Each FX FCM's Liability is offset against that FX FCM's non-cash Collateral 

account (being a sub-account of the FX FCM's financial account) (for IM 

only) or funds in that FX FCM's cash account (being a sub-account of the FX 

FCM's financial account) (for VS/Price Alignment Amounts/IM). Initial 

Margin will always be a Liability (payable to the Clearing House) and 

Variation Settlement, NSA and Price Alignment Amounts may be a cash 

posting or a Liability (payable by, or to, the Clearing House, respectively).

FX FCMs are informed via email of their Liabilities as a percentage of their 

current total cover (such percentage being shown as a percentage of the 

aggregate cover in their cash and non-cash Collateral account(s)) and are 

directed to the ForexClear Services portal (being a secure website made 

available to FXCCMs) (the “ForexClear Service Portal”) which provides 

reports (at the times specified in Section 2.2.24) informing FX FCMs of their 

(i) total Liabilities under the FCM ForexClear Service; (ii) current total cover 

posted with the Clearing House for the FCM ForexClear Service (including 

MER Buffer and/or ForexClear Tolerance, if any); and (iii) Liabilities as a 

percentage of their current total cover (such percentage being shown as a 

percentage of the aggregate cover in their cash and non-cash Collateral 

account(s)).
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House's Risk Management Department. Transfers will only be effected once 

adequate cover has been provided by both parties to the transfer.

2.2.23 FCM Clearing Member's Client Fund Transfer

The FCM ForexClear Clearing System provides functionality for the transfer 

of FCM ForexClear Contract whereby an FCM Client has incorrectly booked 

the FCM ForexClear Contract to a fund, and wishes to re-locate the FCM 

ForexClear Contract to an alternative fund within the accounts of the same 

FCM Clearing Member.

Transfers can only occur based upon the below rules:

(a) A valid request has been received by the Clearing House from the 

applicable FCM Clearing Member on behalf of the FCM Client, as 

per Schedule 2.2B.

(b) The FCM ForexClear Contract is registered by the Clearing House, 

and sufficient Margin has been furnished to cover the FCM 

ForexClear Contract.

(c) Transfers are only handled within the accounts of a single FCM 

Clearing Member (i.e., not a transfer between two FCM Clearing 

Members).

Transfer requests received by FCM ForexClear Operations prior to 15:00 

London time will be managed and included in the 18:00 London time margin 

run. The transfer of the FCM ForexClear Contract will occur provided that

sufficient Margin is held for the FCM Clearing Member and outstanding 

payments of Variation Settlement and other obligations have been made as 

necessary.

2.2.24 ForexClear Reporting

For purposes of reporting obligations to the CFTC, FXCCMs may only report

details of FCM ForexClear Contracts, including terminations and

modifications to an FCM ForexClear Contract, to an Approved LCH SDR. A

list of Approved LCH SDRs is available on the Clearing House's website. In

the event an FXCCM wishes to report details of FCM ForexClear Contracts to

a swap data repository that is not an Approved LCH SDR, the FXCCM must

provide the Clearing House with reasonable prior notice of the date on which

it wishes to report to such swap data repository.

FXCCMs must inform their respective FCM Clients of the list of Approved

LCH SDRs, and inform such FCM Clients that the Clearing House is only

able to report details of an FCM ForexClear Contract to an Approved LCH

SDR.

The Clearing House produces a suite of treasury reports for members across 

each of the Clearing House services. Some of these reports are cross-service 

reports and others are specific to the ForexClear Service (including the FCM 

ForexClear Service), thus an FX FCM will receive reports in respect of the 
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FCM ForexClear Service and may also receive cross-service reports where it 

is a member of another service. Follow this link to the information available 

from the LCH website: https://www.lch.com/membership. The terminology 

used in a report in respect of Margin, Variation Settlement or Price Alignment 

Amount may reflect terminology commonly used in the industry. Such 

terminology shall not affect the interpretation or construction of any 

provisions or terms of the FCM Regulations or FCM Procedures.

In respect of the FCM ForexClear Service, on each business day the Clearing 

House will provide two sets of reports to FX FCMs: (1) Banking Reports; and 

(2) reports direct from the FCM ForexClear Service (together “ForexClear 

Reporting”). These Procedures reference the FCM ForexClear Service 

specific reports. Each day's report will remain available for download by FX 

FCMs from the FCM ForexClear Service Portal for five days.

The Clearing House (acting, where applicable, through the entity to which it 

has elected to delegate the relevant reporting obligations) shall, to the extent 

required by (and in line with the requirements of) Applicable Law (including 

Parts 43 and 45 of the CFTC Regulations, and applicable requirements under 

English law), report to one or more data or trade repositories (including swap 

data repositories) or similar body the details of all FCM ForexClear 

Transactions and FCM ForexClear Contracts, including any modifications or 

terminations without duplication and no later than the working day following 

the conclusion, modification or termination of such contract. In order to avoid 

any such duplication of reports, each FX FCM acknowledges and agrees that it 

will not report the details referred to in this paragraph to the bodies referred to 

in this paragraph, unless otherwise agreed with the Clearing House.

(a) Margin Liability Reports

Reports detailing Liabilities are provided to FX FCMs following every 

scheduled Margin Run in accordance with Section 2.2.17 and where 

additional Collateral or other payment has been called by the Clearing 

House. Additionally, a report, including sensitivities, is provided at 

ForexClear Contracts level. A report will also be provided detailing an 

FX FCM's Margin utilization level. If an FX FCM's Liabilities exceed 

its total available Margin, ForexClear will alert the FX FCM.

(b) Market Data Reports

Reports detailing Market Data are provided to FX FCMs following 

every scheduled Margin Run. They include reports of Market Data 

and Settlement Rate used in the valuation of FCM ForexClear 

Contracts and reports of Market Data shifts for each historic scenario 

used in IM calculations.

(c) Trade Reports

Reports are provided that enable FX FCMs to monitor their firms'

trading events and positions in respect of ForexClear. Reports on open 

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Transactions and FCM ForexClear Contracts are generated at EOD and 

reports on transferred FCM ForexClear Contracts are made on an ad 

hoc basis.

(d) Trade Fixing and Settlement Reports

Reports are published on each business day detailing the FCM 

ForexClear Contracts to which the Settlement Rate has been applied on 

that business day (the “NDF Fixings” report), FCM ForexClear 

Contracts that have been settled during that current business day (the 

“Settlements Today” report) and FCM ForexClear Contracts that will 

settle the next business day (the “NDF's Fixed with Settlement 

Tomorrow” report).

(e) Fees Reports

Reports on trading volumes on a daily and monthly basis are provided 

to FX FCMs. Monthly reports are provided on the last business day of 

each month. They include the full trading volumes on which the 

monthly transaction fees will be charged to those FX FCMs choosing 

to have tariffs levied per transaction.

(f) Banking Reports

Follow this link:Reports relating to an FX FCM’s Collateral are available 

from the Clearing House portal at 

https://clearingservices.lch.com/portal/login. 

https://www.lch.com/membership

(g) Real-time Reporting

A near real-time view of member liabilities, Collateral pledged, 

Margin and credit utilization will be available from the ForexClear 

Service Portal (referred to in Section 2.2.17).

In accordance with CFTC Part 45 requirements (where the FX FCM 

has a reporting obligation), FX FCMs must provide the Clearing House 

(i) the USI of the original swap that is submitted to the Clearing House 

for registration and (ii) the LEI of the original swap SDR (i.e., 

“OriginalSwapRepository” or equivalent field) to enable the Clearing 

House to accurately report the termination of the original swap to the 

appropriate SDR.

2.2.25 Treasury Operations & Collateral Management

(a) Cover Distribution

The Clearing House nets each FX FCM's Liabilities (i.e., margins, 

settlements, Price Alignment Amounts and multipliers) and then the 

total of Cash collateral and non-cash Collateral are applied to offset 

those net Liabilities. This process is known as cover distribution 
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(“Cover Distribution”). FX FCMs can choose whether cash or noncash Collateral should be applied first. At the end of this process, if an 

FX FCM has a shortfall, a PPS (as defined in Section 2.2.25(c) below) 

call for additional Collateral, settlement amounts or Price Alignment 

Amounts is made. Conversely, any excess cash remaining after the 

final overnight Margin Run can, if requested before 09:30 hours be 

repaid to the FX FCM.

(b) Cover Distribution Notification

FX FCMs are informed via email of their: Liabilities as a percentage 

of their current total cover (such percentage being shown as a 

percentage of the aggregate cover in their cash and non-cash Collateral 

account(s)) and are directed to the ForexClear Service Portal which 

provides reports (at the times specified in Section 2.2.24) informing 

FX FCMs of their (i) total Liabilities under the ForexClear Service; 

(ii) current total cover posted with the Clearing House for ForexClear; 

and (iii) Liabilities as a percentage of their current total cover (such 

percentage being shown as a percentage of the aggregate cover in their 

cash and non-cash Collateral account(s)).

The reports accessed via the ForexClear Service Portal will enable FX 

FCMs to log in and examine the underlying data.

(c) Protected Payment System

The Clearing House operates the pProtected pPayments sSystem 

(“PPS”) for transferring funds to and from its FX FCMs to cover their 

Transfer Requirements. This is similar to a direct debit arrangement 

where the PPS bank confirms that any Clearing House-specified call is 

met.

FX FCMs are obliged to hold an account with a UK PPS bank in USD, 

as well as a USD account with a PPS bank in the USA.

Follow the link below for aThe list of PPS banks operating in the UK 

and US is available from the Clearing House on request. :

List of PPS Banks4

(d) Acceptable Forms of Collateral Cover

Follow the link below for aA detailed description of acceptable 

collateral and applicable processes applicable from time to time:

Risk Management/LCH/Acceptable Collateral 5is available from the 

Clearing House on request.

4 https://www.lch.com/risk-collateral-management/sa-collateral-management/sa-acceptable-collateral/saacceptable-cash-0
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(e) Interest and Accommodation

Interest is payable to or by FX FCMs on cash Collateral with respect to 

the ForexClear Service held by the Clearing House. The rate to be 

applied will be either LDR – London Deposit Rate, or CDR – Client 

Deposit Rate, as further described in Section 1.6.3 of Section 3 of the 

Procedures and as prescribed by the Clearing House from time to time 

by publication on its website.

A utilization fee, known as an accommodation charge, is charged on 

securities lodged at the Clearing House to cover liabilities. For an

overview of interest and accommodation charges, please contact the 

Clearing House's Treasury Operations. or follow the link below:

Overview of interest and charges6

The Clearing House shall notify FX FCMs of any change to the LDR 

for the ForexClear Service via member circular.

2.2.26 Default Management

(a) Portfolio Splitting

As part of the ForexClear DMP (contained in the ForexClear DMP 

Annex to the Default Rules), the Clearing House may divide an 

Auction Portfolio into two or more individual Auction Portfolios. In 

circumstances where such portfolio splitting is adopted, the Clearing 

House will, in consultation with the ForexClear DMG (as defined in 

the ForexClear DMP Annex to the Default Rules), seek to create:

(A) one or more individual Auction Portfolios which have 

comparatively greater levels of risk associated with them, 

thereby isolating such Auction Portfolios from those which are 

more risk neutral; and

(B) one or more individual Auction Portfolios which are more risk 

neutral.

(b) Acceptance of Bids

In deciding whether to accept a bid, the Clearing House will generally 

accept the best bid in respect of any individual Auction. However, the 

Clearing House is entitled to reject a bid in the event that it considers, 

in its reasonable discretion that accepting the bid may:

5 https://www.lch.com/risk-collateral-management/ltd-collateral-management/ltd-acceptable-collateral

6 https://www.lch.com/risk-collateral-management/ltd-collateral-management/ltd-fees-collateral
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3.2.1 PPS Mandates

(a) Introduction

An FCM Clearing Member is required to maintain a:

(i) US dollar PPS account with any US PPS bank; and

(ii) PPS bank account with any UK PPS bank in EUR, USD and 

GBP, and each currency in which it incurs settlement

obligations, and provides Securities Collateral, to the Clearing 

House. An FCM Clearing Member may use different UK PPS 

banks for different currencies.

Please refer to the following linkClearing House’s website for details.:

www.lch.com/risk_management/ltd/pps/

FCM Clearing Members are responsible at all times for ensuring that 

their PPS bank accounts have sufficient funds or credit lines to be able 

to meet calls from the Clearing House.

Any bank charges connected with the holding of any PPS bank 

accounts or related to any activity on that account must be paid by the 

FCM Clearing Member holding the relevant account PPS mandates.

The GBP non-segregated PPS account will, inter alia, be used to 

process Contributions for all services other than the ForexClear 

Service. For ForexClear Service, the USD non-segregated PPS 

account is used.

Where applicable, all PPS accounts that hold FCM Client Funds must 

be segregated in accordance with the FCM Regulations and the 

applicable provisions of the CEA and CFTC Regulations, including but 

not limited to Part 1, Part 22 and Part 190 of such regulations. 

Furthermore, PPS accounts that contain FCM Client Funds held with 

respect to Futures/Options Contracts may not contain FCM Client 

Funds held with respect to Cleared Swaps, unless permitted under the 

CEA or CFTC Regulations.

Each FCM Clearing Member is required to complete a standard form 

UK PPS Mandate and US PPS Mandate (copies are available from 

treasury.ops.uk@lch.com) for each bank branch at which they wish to 

operate an account before clearing can commence. The original of the 

mandate must be signed by a person with the appropriate authority 

within the FCM Clearing Member institution and then forwarded to the 

relevant bank. A copy must also be forwarded at the same time to the 

Clearing House Onboarding Department.
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(b) Currency Conversion

The Clearing House supports cross currency collateral, which allows 

the FCM Clearing Member to elect to use cash cover denominated in 

one currency in respect of initial and contingent margin liabilities 

calculated in another currency. FCM Clearing Members must nominate 

the currency in which they wish to cover margin liabilities by prior 

arrangement with the Clearing House’s Treasury Operations.

(c) Morning PPS Calls

FCM Clearing Members' liabilities are calculated overnight. Should 

the relevant liability not be covered by acceptable forms of Collateral 

held by the Clearing House (see section 3.3) any shortfall is called 

through UK PPS with separate calls made for each currency. Each 

FCM Clearing Member must ensure that its UK PPS bank(s) meets all 

payment instructions received from the Clearing House. Confirmation 

of payments, as notified, must be received by the Clearing House from 

the relevant PPS bank(s) by 09:00 London time, or within one hour of 

a subsequent call, on the day on which the PPS call is made. Payments 

will only be recognized for this purpose if the relevant PPS bank (i) 

has performed its concentration function (being the transfer of net 

funds from the PPS bank to a central account in the name of the 

Clearing House) (ii) has made such payments, and (iii) any time 

permitted by the relevant payment settlement system for the recall of 

any such payment has expired.

Where payments are due to an FCM Clearing Member, payments will 

be recognized as soon as payment instructions in respect of that 

payment have been given to a PPS bank. For this purpose, a payment 

instruction will only be recognized to the extent that the Clearing 

House has taken steps to transfer to the PPS bank any such sums as 

may be necessary to enable that payment instruction to be performed 

by the PPS bank.

(d) Intra-day PPS Calls

The intra-day margin call by the Clearing House is for intra-day 

Margin payments. 

The Clearing House will call intra-day margin through UK PPS 

accounts, except where it wishes to make such a call after the UK PPS 

cut-off time (08:00 New York time), in which case such a call will be 

made upon the FCM Clearing Member's nominated US PPS account.

Only USD will be called by default during the hours of UK PPS for 

each mnemonic/sub-account. FCM Clearing Members may request a 

change to the default currency no later than 09:30 London time in 

order for the change to be implemented the following day. FCM 

Clearing Member's may submit a request to change their currency at 

the following link:
FCM Procedures Financial Transactions

LCH Limited © 20232 - 248 - May March 20232

www.lch.com/risk_management/ltd/preferential_currency_for_intrada

y_margin_calls_form.asp

The Clearing House has the ability to call US dollars in respect of an 

intra-day margin call up until 16:00 New York time (21:00 London 

time).

The Clearing House must receive confirmation of payment from the 

FCM Clearing Member's nominated PPS bank(s) within one hour of 

receipt of the intra-day call by the relevant bank branch.

Failure of a bank to confirm a PPS call within one hour may result in 

the FCM Clearing Member being declared in default. Late 

confirmation of PPS calls is reported to the regulators of the LCH 

Group.

(e) Auto repay

FCM Clearing Members may request that they are automatically repaid 

any excess USD cash balances that remain on their accounts at the end 

of each day. FCM Clearing Members must contact Treasury 

Operations in order to have auto-repay applied to their accounts. 

(LCHOperations-Treasury@lch.com or telephone +44 (0)20 7426 

7505). In certain circumstances and following notification to one or 

more Regulatory Bodies, the Clearing House may disable the autorepay functionality for all FCM Clearing Members of a clearing 

service. The Clearing House will notify FCM Clearing Members via 

Clearing Member Circular in the event that the functionality is 

disabled. This Section 3.2.1(e) only applies to Proprietary Accounts.

(f) Value Date

Although confirmation from the banks that PPS payments will be made 

must be received within the deadlines set out in Sections 3.2.1(c) and

3.2.1(d), subject to Section 3.2.1(h), all currency transactions are 

processed by PPS with next business day value with the exception of 

the following currencies: CAD, EUR, GBP, MXN and USD, which are 

processed with value for the same business day.

(g) Foreign Bank Holidays

The Clearing House has made arrangements with UK PPS banks to 

operate the PPS on all UK banking days including foreign bank 

holidays.

In respect of currency holidays for EUR, GBP and USD (“Major 

Currencies”), FCM Clearing Members are required to be able to meet 

PPS calls in all of the three Major Currencies and therefore must have 

an account with a PPS Bank in London in each of EUR, GBP and 

USD. If an FCM Clearing Member’s preferred currency is available to 

be settled on a currency holiday, the Clearing House will call such 
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preferred currency. In the event that such currency is not available to 

be settled on a particular day, the Clearing House will (i) firstly apply 

excess it may hold in respect of an FCM Clearing Member and then 

(ii) issue calls in the following order:

(i) on a USD holiday, the Clearing House will issue a call in EUR;

(ii) on a GBP, holiday the Clearing House will issue a call in USD;

(iii) on an EUR holiday the Clearing House will issue a call in GBP; 

(iv) on a day which is both a USD holiday and a EUR holiday, the 

Clearing House will issue a call in GBP; and

(v) on a day which is both a USD holiday and a GBP holiday the 

Clearing House will issue a call in EUR.

The Clearing House will observe an FCM Clearing Member’s currency 

preferences on all days, other than currency holidays.

Confirmation that PPS payments will be made must be received within 

the deadlines set out in Sections 3.2.1(c) and 3.2.1(d). However, the 

value date for any PPS transactions made on a day which is a bank or 

public holiday in the country of that currency will be for the next 

business day on which both the foreign currency center and the 

Clearing House are open for business. This applies to GBP, CAD, 

EUR and USD.

Example: 20 August is a public holiday in the USA, but not in the UK. 

21 August is a normal banking day in the USA.

On 20 August, the Clearing House will issue its normal USD 

instructions to PPS banks, and receive confirmation in response to the 

PPS call, for value on 21 August.

Please refer to the Clearing House’s website and FCM Clearing 

mMember circulars for details of the Clearing House’s opening days 

and currency holidays.s at the following link

www.lch.com/member_notices/.

(h) UK Bank Holidays

The Clearing House does not give value to any currency on a UK bank 

holiday, if the Clearing House is closed for business on that bank 

holiday. 

However, the Clearing House may sometimes be open for business on 

a UK bank holiday and in such circumstances PPS calls will be made 

as normal that day. Value will be given the same day provided that the 

relevant currency center is open for business. 
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(i) Use of UK PPS and US PPS

These FCM Procedures indicate which part of the PPS system will be 

used in the normal course of events for making PPS calls. Generally,

UK PPS will be used for Morning PPS calls (including Contributions 

to the default fund), remitting surplus cash balances to an FCM 

Clearing Member, and for making intra-day margin calls up to 16:00 

London time. However, FCM Clearing Members should be aware that 

the Clearing House reserves the right to direct a Morning PPS call or 

intra-day margin calls before 16:00 London time to an FCM Clearing 

Member's US PPS account in exceptional circumstances (an 

“Exceptional PPS Call”). The Clearing House will use all reasonable 

commercial efforts to notify the FCM Clearing Member in advance of 

issuing any such Exceptional PPS Call.

(j) Contingency Payment Arrangements

FCM Clearing Members are required to have contingency payment 

arrangements in place to ensure that they can continue to meet their 

margin, Variation Settlement, Price Alignment Amount and other

obligations in the event of failure of their nominated PPS bank. 

During the application process, the Clearing House will require the 

applicant to provide evidence of these arrangements and will test these 

prior to the applicant becoming an FCM Clearing Member. The FCM 

Clearing Member will be required to provide evidence of their 

contingency payment arrangements on an ongoing basis at the Clearing 

House’s request.

(k) Recovery from Insolvent PPS Banks

In the event that payment is not completed by the relevant PPS bank, 

due to insolvency rather than technical failure, and the affected FCM 

Clearing Member(s) make alternative payments, should the Clearing 

House make a recovery from the estate of the PPS bank, it will credit 

such recovery, net of costs, to the accounts of the affected FCM 

Clearing Members in proportion to the amount of the original missed 

payment.

3.3 Acceptable Forms of Cover

The Clearing House accepts certain types of securities and cash in the Clearing 

House's prescribed form as Collateral against liabilities of the relevant FCM Clearing 

Member.

Please refer to the Clearing House’s website following link for further details. : 

http://www.lch.com/risk_management /ltd/acceptable_collateral.asp

The Clearing House may vary, at its discretion, the standard requirements and 

valuation procedures set out in this Section, either generally or in a particular case, 

without giving prior written notice to FCM Clearing Members. Further, the Clearing 
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House may vary the types of collateral acceptable to it as Collateral, including but not 

limited to cash, performance bonds or securities.

3.3.1 Cash

In order not to fall within the scope of deposit-taking regulations applying to 

banks and similar institutions, the Clearing House can accept cash from FCM 

Clearing Members only in relation to current or anticipated obligations.

Cash cover need not be provided in the same currency as that of the liability. 

In such cases, currencies will be notionally converted with reference to quoted 

exchange rates determined at approximately 16:45 London time the previous 

business day.

FCM Clearing Members must give LCH Limited Treasury Operations no less 

than two business days' notice of their intention to request withdrawal of cash 

Collateral and its replacement by the lodgment of non-cash Collateral or the 

replacement of one currency for another. Where an FCM Clearing Member 

fails to give such notice, the Clearing House may decline to release such cash 

Collateral until the end of the required notice period. This paragraph applies 

only to the Proprietary Account of an FCM Clearing Member.

3.3.2 Securities

Please refer to the Clearing House’s following pages on our website for both 

prevailing haircuts and notes on the types of collateral acceptable to the 

Clearing House as Collateral. :

http://www.lch.com/risk_management/ltd/acceptable_collateral.asp

3.3.3 Securities Value Notification

FCM Clearing Members may obtain details on the Margin value of securities 

on their account by viewing the relevant reports available on the Member 

Reporting Website.

3.3.4 Investment of FCM Client Funds

Pursuant to the application of FCM Regulation 7(n)(ii)(A), the investment of 

cash Collateral held on behalf of FCM Clients by the Clearing House in 

respect of clearing Swaps Products and Futures Products (“Swaps and 

Futures Cash Collateral”) is limited to investment in U.S. Treasury securities 

(through outright purchases, repurchase or reverse repurchase transactions)

and in Euro-denominated sovereign debt issued by the French Republic or the 

Federal Republic of Germany (through repurchase or reverse repurchase 

transactions), in each case, as permitted by and in accordance with Applicable 

Law.

(a) Each FCM Clearing Member shall instruct the Clearing House, in 

the form and manner specified by the Clearing House, whether or 

not to invest Swaps and Futures Cash Collateral that is held on behalf 
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3.4.2 Cash currency preference

FCM Clearing Members may nominate the sequence of cash Collateral 

distribution.

In the absence of a nominated sequence of currency preferences, an FCM 

Clearing Member’s liabilities will be covered by cash in the same currency as 

the liability. This means that a GBP liability will be covered in GBP cash, a 

EUR liability will be covered in EUR cash and so forth. Any further liabilities 

in the relevant currency will be covered by cash called via PPS.

FCM Clearing Members may define their own sequence of cash currency 

utilization for each mnemonic and each account type (i.e. House or Client). 

The sequence does not have to be on a like for like basis and an FCM Clearing 

Member may choose any eligible currency to cover its liability (for example, a 

GBP liability can be covered in EUR cash).

Any changes to an FCM Clearing Member’s nominated currency sequence, or 

a request to excess cash currency balances in a particular currency, should be 

notified to the Clearing House by providing a minimum of two business days’ 

notice.

3.4.3 Record of cover provided

Charges and interest shall be calculated in accordance with the information 

published on the website of the Clearing House.

3.4.4 Use of a Defaulter's cover

Post-default the Clearing House is entitled to realize and/or apply a Defaulter’s 

cover in whatever order it deems appropriate.

3.4.5 Overnight FCM Funding Account

Upon request from an FCM Clearing Member, the Clearing House may open 

an Overnight FCM Funding Account. The Clearing House will, in general, 

apply available Standard FCM Buffer to satisfy liabilities in accordance with 

FCM Regulation 15 before it applies available Overnight FCM Funding 

Collateral, but may, at its sole discretion, determine to apply some or all 

available Overnight FCM Funding Collateral before it applies Standard FCM 

Buffer. 

3.5 Interest, Price Alignment Amount and Accommodation Charge Structure

3.5.1 Cash Balance Interest Rate

The Clearing House applies interest to FCM Clearing Members’ cleared cash 

balances. The following rates are applied:

(a) LDR – London Deposit Rate – the rate at which the Clearing House 

will pay or charge interest on credit cash balances (excluding 

Contributions). The LDR calculation methodology utilizes 
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LCH Limited © 20232 - 255 - May March 20232

published market rates minus a spread. The current spread rates are 

published on the Clearing House’sLCH website at the following 

link: http://www.lch.com/fees/ltd/custody_services.asp; and

(b) CDR – Client Deposit Rate – the rate at which the Clearing House 

will pay or charge interest on credit cash balances on Client 

financial accounts. The CDR calculation methodology utilizes 

published market rates minus a spread. The current spread rates are 

published on the Clearing House’s LCH website at the following 

link: http://www.lch.com/fees/ltd/custody_services.asp.; and

For the avoidance of doubt, the Clearing House may apply a different or 

separate LDR or CDR on FCM Clearing Member’s cleared cash balances with 

respect to each Service.

(c) Default Fund Rate.

Rates are available from the Clearing House’s wMember Reporting Website.

The Clearing House reserves the right to alter the basis of calculating each 

above listed interest rates. Any alteration will be effective on the date 

notified.

Where the Clearing House provides FCM Clearing Members with at least 

three days written notice (which may be way of member circular), the 

Clearing House may increase or decrease the LDR by up to 10bps. The 

foregoing shall not apply in the event of extreme market conditions, during 

which the Clearing House may freely and without notice increase or decrease 

the LDR for up to five consecutive Business Days.

Where the Clearing House provides FCM Clearing Members with two weeks’ 

written notice (which may be way of member circular), the Clearing House 

may increase or decrease the CDR. In the event of extreme market conditions, 

the Clearing House may freely and without notice increase or decrease the 

CDR for up to five consecutive Business Days.

3.5.2 Price Alignment Amount Rate

The calculation of the Price Alignment Amount shall use the applicable 

interest rate specified and published on the Clearing House’s website. The 

Clearing House shall not change the interest rates used for the calculation of 

Price Alignment Amount in respect of USD, EUR, GBP, JPY and CHF 

without the consent of all FCM Clearing Members holding open FCM 

SwapClear Contracts in such currencies.

Notwithstanding the foregoing, in the event the interest rate source used for 

the calculation of Price Alignment Amount (a) is unavailable (including where 

such rate ceases, or will cease, to be provided by its administrator), (b) is not 

sufficiently robust, (c) is not fit for purpose, or (d) has materially changed, in 

each case as determined in the Clearing House’s sole discretion, the Clearing 
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House gives no undertaking that, on the Default of an FCM Clearing Member, 

it will not utilize Collateral furnished on behalf of an FCM Client which has 

been passed to it by an FCM Clearing Member, before utilizing any other form 

of Collateral the Clearing House may hold.

4.1.3 Additional General Information

The Clearing House is, at its sole discretion, entitled to determine what will be 

acceptable to it as Collateral and to determine when a security will cease to be 

acceptable as Collateral.

If any cash, instrument or security lodged in accordance with any of the 

following FCM Procedures is in any way found to be unacceptable, it will 

immediately be given a zero value in the FCM Clearing Member's relevant

account with the Clearing House. Replacement Collateral may be required 

immediately from the FCM Clearing Member.

4.1.4 Instructions

The Clearing House accepts instructions to lodge, release and transfer cash 

and securities via the CMS and/or any other operational process the Clearing 

House determines. If there is an outage of the CMS, an FCM Clearing 

Member may send certain instructions using the appropriate form in the 

Schedules of these FCM Procedures by fax and email to

collateral.clientservices@lseg.com. :

Email to collateral.ops.uk@lch.com

Fax: + 44 (0)20 7375 3518

Collateral Operations can be contacted on +44 (0)207 426 7505 7593.

The Clearing House is entitled to act upon CMS instructions or 

communications appearing to have been issued by or on behalf of, or to have 

come from, an FCM Clearing Member. These will be accepted by the 

Clearing House as genuine, even if, for example, they are later found:

(a) to be inaccurate, whether in whole or in part; or

(b) not to have been given by the FCM Clearing Member or with the 

authority of the Clearing Member.

The Clearing House will only accept delivery of securities Collateral from an 

FCM Clearing Member in accordance with these FCM Procedures and will 

not sell or purchase cash or securities Collateral for FCM Clearing Members, 

except in so far as it is acting under its Default Rules and related provisions of 

the FCM Rulebook or in relation to Exchange Rules.

The Clearing House reserves the right to change the information required on 

instructions received via the CMS, whenever the Clearing House, at its sole 

discretion, considers that it would be appropriate to do so.
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The Clearing House will promptly on or after the appropriate payment date 

take such steps as are necessary to transfer Coupons to the relevant FCM 

Clearing Member (except Coupons which are automatically transferred to 

such FCM Clearing Member by operation of a triparty transaction), provided 

that the Clearing House shall only be obliged to take such steps pursuant to 

this Section 4.1.10:

(a) to the extent that they constitute Excess Margin;

(b) if the FCM Clearing Member is not a Defaulter;

(c) to the extent the Clearing House is permitted to take such steps and 

make such transfer under Applicable Law and the contractual 

provisions of any relevant Depository; 

(d) if the Clearing House considers it is not necessary or desirable to 

retain such Coupons in order to effect (or seek to effect) a transfer of 

FCM Contracts and Collateral from an account of an FCM Clearing 

Member to another account of an FCM Clearing Member or NonFCM Clearing Member in accordance with the FCM Rulebook, the 

FCM Procedures, the UK General Regulations and/or UK General 

Procedures; and

(e) if there is no overnight margin and/or cash call (including an EOD 

Margin Run call) in respect of the relevant FCM Clearing Member 

which remains outstanding.

4.1.11 Record Date

The Clearing House may restrict the lodgement, release and/or transfer of noncash Collateral on a record date for the payment of a Coupon applicable to 

such non-cash Collateral where the Clearing House considers this necessary in 

order to correctly pay such Coupon to the relevant FCM Clearing Member on 

the Coupon payment date.

4.2 Securities

4.2.1 General Information

Securities must be lodged in the Clearing House's relevant settlement accounts 

(see Schedule 4D).

4.2.2 Settlement procedures – Securities

All transactions to deposit or withdraw securities Collateral with or from the 

Clearing House will be executed free of payment.

4.3 Instructions via the CMS

The Clearing House will action instructions relating to Collateral that have been input 

and authorized via the CMS in accordance with, and subject to, this Section 4 of the 

FCM Procedures. The details input on the CMS will form the basis of the matching 
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instruction sent to the relevant Depository. FCM Clearing Members must ensure that 

the details are input correctly in order to avoid unmatched transactions

It is the responsibility of the FCM Clearing Member to input a cancellation request of 

any incorrectly input instruction and to subsequently input the correct details in a new 

instruction. Please note that it may not be possible to cancel an instruction (please 

refer to Section 4.4.7 below for further details).

The Clearing House will update the status of the instruction in the CMS to reflect the 

status of the corresponding instruction at the relevant Depository. On settlement of 

the transaction at the relevant Depository, the Clearing House will reflect the balance 

of the securities on the relevant account of the FCM Clearing Member and take them 

into account for the purposes of calculating the value of the FCM Clearing Member’s 

Margin.

The relevant account details that an FCM Clearing Member should use for matching 

transactions at a Depository are available from the Clearing House on requestlocated 

at www.lch.com/documents/731485/762486/lch-custodian-settlement-accounts-formargin-collateral-ltd-2809.pdf/6857526e-1d18-4b86-9e4a-bc1b7e2a4234.

The Clearing House will not be liable for any losses to FCM Clearing Members or 

third parties caused by non-settlement or by a delay in settlement as a result of the 

actions or omissions of a Depository or the FCM Clearing Member (save for any 

liability which may not be excluded by Applicable Law).

4.4 Settlement Procedures – Securities

All transactions to transfer securities Collateral to or from the Clearing House will be 

executed free of payment.

4.4.1 Instruction Deadlines

FCM Clearing Members may input security instructions via the CMS at any 

time. Instructions will only be actioned by the Clearing House during 

operational hours.

Collateral Operations’ operational hours are Monday to Friday 07:00 to 21:00 

UK time.

Instruction deadlines are available on the Clearing House’s website. The 

Clearing House will (subject to Section 4.1.11) input matching instructions to 

the relevant Depository for same day settlement when the instructions are 

received prior to the applicable deadlines above.

4.4.2 Deliveries to and from Local Markets

The Clearing House is bound by the settlement deadlines of the relevant 

Depository. FCM Clearing Members should refer to the relevant Depository

for these deadlines. Note that for transactions from local markets the 

settlement deadline may be earlier than the Clearing House hours of operation 

and should therefore be instructed the day before the settlement date (i.e. on 
5 

Appendix II

Procedures Section 1 (Clearing Member, Non-Member Market Participant and Dealer Status)

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CLEARING MEMBER, NON-MEMBER MARKET 

PARTICIPANT AND DEALER STATUS
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The Clearing House shall be entitled to charge Clearing Members fees, charges, levies 

and other dues as prescribed by the Clearing House from time to time, provided, that 

the Clearing House shall provide Clearing Members no fewer than fourteen (14) days’ 

prior notice of any increase to such fees, charges, levies or other dues. The Clearing 

House may provide the aforementioned notice by way of Clearing Member circular or 

notification, which may include notification via the Clearing House’s website.

1.11 Other Conditions

The Clearing House may, at any time, impose additional conditions in relation to 

continued Clearing Member status, and at any time vary or withdraw any such 

conditions, provided that any such conditions which restrict, or may be considered to 

have the effect of restricting, access of a Clearing Member to the Clearing House shall 

be imposed only in circumstances where, and to the extent that, their object is to control 

the exposure of the Clearing House to risk. Clearing Members are referred to the 

Clearing House's website for further information about the relevant internal risk 

management policies and procedures of the Clearing House. 

The relevant additional conditions imposed on a Clearing Member may include, but are 

not limited to, a requirement to transfer additional cash or non-cash Collateral to the 

Clearing House, as determined by the Clearing House.

1.12 Jurisdictional Requirements

1.12.1 Singaporean Clients

Clearing Members are required to provide a copy of the ‘Notice to Singapore 

Clearing Clients’ to Clearing Clients incorporated in or operating through a 

branch in Singapore. The ‘Notice to Singapore Clearing Clients’ is available 

from the Clearing House on request.at: 

https://www.lch.com/system/files/media_root/singapore%20client%20disclosu

re.pdf.

1.12.2 Restrictions on Clearing Members and SCM Branches incorporated in or 

domiciled in Japan (each a “Japanese Clearing Member” or “Japanese SCM 

Branch”, respectively)

(a) Japanese Clearing Members and Japanese SCM Branches are not 

permitted to participate in the Portfolio Margining Service.

(b) Japanese Clearing Members and Japanese SCM Branches shall not clear 

Yen-denominated SwapClear Contracts.

1.12.3 Restrictions on Clearing Clients incorporated in or domiciled in Japan 

(“Japanese Clearing Clients”)

(a) Clearing Members may not participate in the Portfolio Margining 

Service on behalf of Japanese Clearing Clients.

(b) Clearing Members shall not clear Yen-denominated SwapClear 

Contracts on behalf of Japanese Clearing Clients.
6 

Appendix III

Procedures Section 2D (EquityClear Clearing Service)

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In the event that nil paid rights are delivered by a Selling Member after 

the last time for delivery, the Clearing House will attempt to deliver the 

securities back to the Selling Member, who will remain liable for 

delivering the chosen option as required by the Buying Member.

Registration of Documents

Where the Clearing House has made delivery of application 

forms/allotment letters to a Buying Member by the last date and time for 

delivery and such Selling Member Fails or omits to register/complete 

such forms in respect of lapsed rights proceeds, then the Clearing House 

may in its absolute discretion, charge an administration fee of a 

minimum of £50 plus VAT to the Buying Member in the event that the 

Clearing House has to pass on such proceeds.

1.17 [INTENTIONALLY LEFT BLANK]

1.18 EquityClear Client Clearing

1.18.1 EquityClear Client Clearing – Ancillary Documentation

(a) Security Deed

Unless specified otherwise by the Clearing House, an EquityClear 

Clearing Member must enter into a Security Deed in respect of its 

Clearing Clients in relation to amounts due to it from the Clearing House 

pursuant to the Client Clearing Annex. Further information in relation to 

such Security Deed is prescribed by the Clearing House from time to 

time and published on the Clearing House's website.

(b) Prescribed Language and End-User Notice

Pursuant to the Clearing House's General Regulations, each EquityClear 

Clearing Member is required to ensure that it includes certain language 

in its agreement with its EquityClear Clearing Client (the "Clearing 

House Prescribed Language"). The Clearing House Prescribed 

Language is shown at Schedule 1 of Section 1 of the Procedures.

EquityClear Clearing Clients' attention is drawn to the End-User Notice 

which is published on the Clearing House's website: End User Notice | 

LCH Group.

http://www.lch.com/about-us/governance/end-user-notices

1.18.2 Backup Clearing Members

An EquityClear Clearing Client may, at any time, appoint one or more Backup 

Clearing Member(s) in respect of the EquityClear Service, for the purpose of 

porting EquityClear Contracts entered into by an EquityClear Clearing Member 
7 

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Procedures Section 2I (ForexClear Clearing Service)

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the Collateral transferred in respect of the initial margin or any

variation margin obligations. This may cover instances where stress 

testing losses under various scenarios provided in the ForexClear 

Default Rules have increased.

1.5.7 Initial Margin Management Events Service ("IMMES"): IMMES aims to find 

risk and initial margin reducing ForexClear Contracts amongst participating 

FXCCMs. IMMES can be run on all Currency Pairs that are cleared through 

the ForexClear Service, although the primary focus will be on those Currency 

Pairs that contribute to the largest Collateral requirement.

FXCCMs who wish to obtain further information about, or to participate in, 

IMMES should contact ForexClear Risk on 0207 426 7527. To be eligible to 

participate in IMMES, an FXXCM must enter into an IMMES agreement with 

the Clearing House (the "IMMES Agreement").

1.6 General Margining Process

A "Margin and Settlement Run" is the process by which the Clearing House 

calculates an FXCCM's initial margin requirement (if any) and, during an EOD 

Margin and Settlement Run (i) in respect of each ForexClear CTM Contract, its 

variation margin requirement and PAI adjustment (if required) or (ii) in respect of 

each ForexClear STM Contract, its NPV Payment and PAA adjustment (if required)

(together the "Margin or Settlement Requirements"), and in the case of (i) only, 

applies that FXCCM's Collateral to satisfy the Margin Requirements for that FXCCM 

in respect of the ForexClear Contracts within that FXCCM's portfolio.

1.6.1 Types of Margin and Settlement Runs: There are three types of Margin and 

Settlement Run:

(a) ITD/Ad Hoc - Day Margin and Settlement Run

(i) ITD/Ad-hoc London daytime Margin and Settlement Runs are 

initiated as and when dictated by the schedule published by the 

Clearing House and notified to FXCCMs from time to time (the 

"Schedule") or as necessary, and are performed in the time 

period during which a PPS call can be made (the "ITD/Ad-hoc 

Day Margin and Settlement Run"), which PPS time period is 

available from the Clearing House on request. PPS times are 

published on the Clearing House's website at: 

http://www.lch.com/en/risk-collateral-management/collateralmanagement/protected-payments-system/pps-concentrationactivities.

(ii) ITD/Ad-hoc Margin Runs are calls in respect of the initial 

margin obligation only. The variation margin obligation, NPV 

Payment obligation, PAI and PAA are not included in ITD/Adhoc Margin Runs.
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(b) EOD Margin and Settlement Run

(i) The EOD Margin and Settlement Run is the final ITD/Ad-hoc 

Day Margin and Settlement Run that completes by 24:00 local 

London time on that business day (the "EOD Margin and 

Settlement Run").

(ii) EOD Margin and Settlement Runs are calls in respect of initial 

margin as well as (i) in the case of ForexClear CTM Contracts, 

variation margin obligations and PAI; and (ii) in the case of 

ForexClear STM Contracts, NPV Payment obligations and 

PAA.

(c) ITD / Ad Hoc - Night Margin Run

(i) ITD/Ad-hoc London overnight Margin Runs are initiated as 

and when dictated by the Schedule or as necessary, and are 

performed in the time period during which a PPS call cannot be 

made (the "ITD/Ad-hoc Night Margin Run").

(ii) ITD/Ad-hoc Night Margin Runs are calls in respect of the 

initial margin obligation only. The variation margin obligation, 

NPV Payment obligation, PAI and PAA are not included in 

ITD/Ad-hoc Night Margin Runs.

1.6.2 Margin and Settlement Run Process

(a) Margin and Settlement Runs cover all registered ForexClear Contracts 

with the status "NOVATED".

(b) Margin and Settlement Runs will be carried out for each ForexClear 

Contract and ForexClear Transaction (as the case maybe) until (and 

including) the later of:

(i) EOD Margin and Settlement Run on the Settlement Date; or

(ii) EOD Margin and Settlement Run after the Settlement Rate is 

published.

(c) During every Margin and Settlement Run the Clearing House 

calculates the Collateral required in respect of the initial margin

obligations and (i) in the case of an FXCCM who is party to 

ForexClear CTM Contracts, the Collateral required in respect of the 

variation margin obligations and PAI required to cover that FXCCM's 

relevant open ForexClear CTM Contracts; or (ii) in the case of an 

FXCCM who is party to ForexClear STM Contracts, the NPV 

Payments and the PAA required in respect of that FXCCM’s relevant 

open ForexClear STM Contracts (each a "Liability" and together the 

"Liabilities"). For these purposes, liabilities in respect of the open 

ForexClear Contracts and ForexClear Transactions registered in an 

FXCCM's Proprietary Account, each of the FXCCM's Client Accounts 

(other than Indirect Gross Accounts) and each Indirect Gross Sub-
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Account within an Indirect Gross Account of such FXCCM will be 

calculated separately.

(d) Each FXCCM's Liability:

(i) in respect of the open ForexClear Contracts registered in an 

FXCCM's Proprietary Account, is offset against that FXCCM's 

non-cash collateral account (being a sub-account of the 

FXCCM's "H" collateral account) (for Collateral in respect of 

initial margin only) or funds in that FXCCM's "H" house cash 

account (being a sub-account of the FXCCM's "H" collateral

account) (for variation margin/PAI/initial margin); and

(ii) in respect of the open ForexClear Contracts registered in a 

particular FXCCM's Client Account, is offset against the 

relevant non-cash collateral account (being a sub-account of the 

FXCCM's Client Account) (for Collateral in respect of initial 

margin only) or funds in the relevant "C" client cash account 

(being a sub-account of the FXCCM's Client Account) (for 

variation margin/PAI/initial margin).

(e) FXCCMs are informed via email of their Liabilities as a percentage of 

their current total Collateral (such percentage being shown as a 

percentage of the aggregate Collateral in their cash and non-cash 

collateral account(s)) and are directed to the ForexClear Service portal 

(being a secure website made available to FXCCMs) (the "ForexClear 

Service Portal") which provides reports (at the times specified in 

Section 1.7.1 (Margin and NPV Payment Liability Reports)) informing 

FXCCMs of their (i) total Liabilities under the ForexClear Service; (ii) 

current total Collateral posted with the Clearing House for the 

ForexClear Service; and (iii) Liabilities as a percentage of their current 

total Collateral (such percentage being shown as a percentage of the 

aggregate Collateral in their cash and non-cash collateral account(s)).

(f) If following a Margin and Settlement Run an FXCCM is required to 

provide additional Collateral, this is also indicated by email and via the 

ForexClear Service Portal. In the case of ITD/Ad-hoc Margin and 

Settlement Runs, where an FXCCM's Liabilities exceed its available 

Collateral, then the Clearing House will issue a margin call for the 

amount of the shortfall plus 50% of the FXCCM's MER Buffer.

1.7 ForexClear Reporting

For purposes of reporting obligations to the CFTC, FXCCMs may only report details 

of ForexClear Contracts, including terminations and modifications to a ForexClear 

Contract, to an Approved LCH SDR. A list of Approved LCH SDRs is available on 

the Clearing House's website. In the event an FXCCM wishes to report details of 

ForexClear Contracts to a swap data repository that is not an Approved LCH SDR, 

the FXCCM must provide the Clearing House with reasonable prior notice of the date 

on which it wishes to report to such swap data repository.
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FXCCMs must inform their respective Clearing Clients of the list of Approved LCH 

SDRs, and inform such Clearing Clients that the Clearing House is only able to report 

details of a ForexClear Contract to an Approved LCH SDR. 

In accordance with CFTC Part 45 requirements (where the FXCCM has a reporting

obligation), FXCCMs must provide the Clearing House (i) the USI of the original

swap that is submitted to the Clearing House for registration and (ii) the LEI of the 

original swap SDR (i.e., “OriginalSwapRepository” or equivalent field) to enable the

Clearing House to accurately report the termination of the original swap to the

appropriate SDR.

The Clearing House produces a suite of treasury reports for members across each of 

the Clearing House services. Some of these reports are cross-service reports and 

others are specific to the ForexClear Service, thus an FXCCM will receive reports in 

respect of ForexClear and may also receive cross-service reports where it is a member 

of another service. Follow this link to the information available from the LCH 

website: https://www.lch.com/membership/

In respect of the ForexClear Service, on each business day the Clearing House will 

provide two sets of reports to FXCCMs: (1) Banking Reports; and (2) reports direct 

from the ForexClear Service (together "ForexClear Reporting"). These Procedures 

reference the ForexClear Service specific reports. Each day's report will remain 

available for download by FXCCMs from the ForexClear Service Portal for five days.

The Clearing House (acting, where applicable, through the entity to which it has 

elected to delegate the relevant reporting obligation) shall report to a trade repository 

or similar body the details of a ForexClear Contract and any modification or 

termination of such contract without duplication and no later than the working day 

following the conclusion, modification or termination of such contract, in line with 

the requirements of Applicable Law.

1.7.1 Margin and NPV Payment Liability Reports: Reports detailing Liabilities are 

provided to FXCCMs following every scheduled Margin and Settlement Run 

in accordance with Section 1.6.2 (Margin and Settlement Run Process) and 

where additional Collateral has been called by the Clearing House. 

Additionally, a report, including sensitivities, is provided at ForexClear 

Contracts level at 22.00 local London time. If the EOD Margin and Settlement

Run has not completed by 22:00 local London time on a particular business 

day, the report generated at EOD will reflect that certain Liabilities of 

FXCCMs are not discharged at the relevant time. A report will also be 

provided detailing an FXCCM's Collateral utilisation level. If an FXCCM's 

Liabilities exceed its total available Collateral, ForexClear will alert the 

FXCCM.

1.7.2 Market Data Reports: Reports detailing Market Data are provided to 

FXCCMs following every scheduled Margin and Settlement Run. They 

include reports of Market Data and Settlement Rate used in the valuation of 

ForexClear Contracts and reports of Market Data shifts for each historic 

scenario used in the initial margin requirement calculations.
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1.7.3 Trade Reports: Reports are provided that enable FXCCMs to monitor their 

firms' trading events and positions in respect of ForexClear. Reports on open 

ForexClear Contracts and on cancelled ForexClear Transactions and 

ForexClear Contracts are generated at EOD and reports on transferred 

ForexClear Contracts are made on an ad hoc basis.

1.7.4 Trade Fixing and Settlement Reports: Reports are published on each business 

day detailing the ForexClear Contracts to which the Settlement Rate has been 

applied on that business day (the "FX Transaction Fixings" report), 

ForexClear Contracts that have been settled during that current business day 

(the "Settlements Today" report) and ForexClear Contracts that will settle the 

next business day (the "FX Transactions’ Fixed with Settlement 

Tomorrow" report).

1.7.5 Fees Reports: Reports on trading volumes on a daily and monthly basis are 

provided to FXCCMs. Monthly reports are provided on the last business day 

of each month. They include the full trading volumes on which the monthly 

transaction fees will be charged to those FXCCMs choosing to have tariffs 

levied per transaction.

1.7.6 Banking Reports: Reports relating to an FXCCM’s Collateral are available 

from the Clearing House portal at https://clearingservices.lch.com/portal/login. 

Follow this link for a full list of banking reports.

2

1.7.7 Real-time Reporting: A near real-time view of member liabilities, collateral 

pledged, collateral and credit utilisation will be available from the ForexClear 

Service Portal (referred to in paragraph (e) of Section 1.6.2 (Margin and 

Settlement Run Process)).

1.7.8 Settlement Limit Reports: As further described in Section 1.19 (Settlement 

Limits for ForexClear Deliverable Contracts).

1.8 Treasury Operations & Collateral Management

1.8.1 Cover Distribution: The Clearing House nets each FXCCM's Liabilities (i.e. 

margins and multipliers) and then the total of cash Collateral and non-cash 

Collateral are applied to offset those net Liabilities. This process is known as 

collateral distribution ("Collateral Distribution"). FXCCMs can choose 

whether cash or non-cash Collateral should be applied first. At the end of this 

process, if an FXCCM has a shortfall, a PPS (as defined in Section 1.8.2

(Protected Payment System) below) call for additional Collateral is made. 

Conversely, any excess cash remaining after the final overnight Margin and 

Settlement Run can, if requested before 09:30 local London time, be repaid to 

the FXCCM.

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(a) Cover Distribution Notification

(i) FXCCMs are informed via email of their: Liabilities as a 

percentage of their current total Collateral (such percentage 

being shown as a percentage of the aggregate Collateral in their 

cash and non-cash collateral account(s)) and are directed to the 

ForexClear Service Portal which provides reports (at the times 

specified in Section 1.7.1 (Margin and Settlement Liability

Reports)) informing FXCCMs of their (i) total Liabilities under 

the ForexClear Service; (ii) current total Collateral posted with 

the Clearing House for ForexClear; and (iii) Liabilities as a 

percentage of their current total Collateral (such percentage 

being shown as a percentage of the aggregate Collateral in their 

cash and non-cash collateral account(s)).

(ii) The reports accessed via the ForexClear Service Portal will 

enable FXCCMs to log in and examine the underlying data.

1.8.2 Protected Payment System: The Clearing House operates the pProtected 

pPayments sSystem ("PPS") for transferring funds to and from its FXCCMs to 

cover their obligations to transfer Margin, NPV Payments, PAA and PAI. This 

is similar to a direct debit arrangement where the PPS bank confirms that any 

Clearing House-specified call is met.

FXCCMs are obliged to hold an account with a London PPS bank in USD, as 

well as a USD account with a PPS bank in the USA.

Follow the link below for a The list of PPS banks operating in the UK and US

is available from the Clearing House on request. : https://www.lch.com/riskcollateral-management/sa-collateral-management/sa-acceptable-collateral/saacceptable-cash-0

1.8.3 Acceptable Forms of Collateral Cover: Follow the link below for Aa detailed 

description of acceptable collateral and applicable processes applicable from 

time to timeis available from the Clearing House on request. :

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-acceptable-collateral

1.8.4 Interest and Accommodation: Interest is payable to or by FXCCMs on cash 

Collateral held by the Clearing House. The rate to be applied will be either 

LDR – London Deposit Rate, or CDR – Client Deposit Rate, as further 

described in Section 1.6.3 of Section 3 of the Procedures and as prescribed by

the Clearing House from time to time by publication on its website.

A utilisation fee, known as an accommodation charge, is charged on securities 

lodged at the Clearing House to cover liabilities. For an overview of interest 

and accommodation charges, please contact the Clearing House's Treasury 

Operations. or follow the link below:

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-fees-collateral
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"Daily Calculation Period" means, in respect of a business 

day, the period, in respect of which the Clearing House 

determines the end of day margin and settlement payments for 

ForexClear Contracts for such business day.

1.11 Provision of Tax Forms

The Clearing House and each FXCCM shall provide to each FXCCM or the Clearing 

House, as relevant, (i) any forms or documents specified in the ForexClear Contract 

between the Clearing House and the FXCCM and (ii) any other form, document, 

statement or certification reasonably requested in writing by the FXCCM or the 

Clearing House in order to allow the FXCCM or the Clearing House to make a 

payment under the Rules of the Clearing House or any ForexClear Contract without 

deduction or withholding for or on account of any tax or with such deduction or 

withholding at a reduced rate unless the Clearing House or the FXCCM can no longer 

deliver such form, document, statement or certification solely as a result of a change 

in law (including double tax treaty) or interpretation thereof after the date of the 

ForexClear Contract between the Clearing House and the FXCCM. In the case of the 

Clearing House, the forms required pursuant to item (ii) above include an Internal 

Revenue Service Form W-8BEN. Additionally, the Clearing House will take such 

further actions as necessary to ensure that payments made to it can be made without 

deduction or withholding for or on account of any Tax.

1.12 ForexClear Client Clearing

1.12.1 ForexClear Clearing Client Clearing – Ancillary Documentation

(a) Security Deed: Unless specified otherwise by the Clearing House, a 

ForexClear Clearing Member must enter into a Security Deed in 

respect of its Clearing Clients in relation to amounts due to it from the 

Clearing House pursuant to the Client Clearing Annex. Further 

information in relation to such Security Deed is prescribed by the 

Clearing House from time to time and published on the Clearing 

House's website.

(b) Prescribed Language and End-User Notice: Pursuant to the Clearing 

House's General Regulations, each ForexClear Clearing Member is 

required to ensure that it includes certain language in its agreement 

with its ForexClear Clearing Client (the "Clearing House Prescribed 

Language"). The Clearing House Prescribed Language is shown at 

Schedule 1 of the Procedure .

ForexClear Clearing Clients' attention is drawn to the End-User Notice 

which is published on the Clearing House's website at 

www.lch.com/membership/ltd-membership/end-user-notice. :

http://www.lch.com/about-us/governance/end-user-notices
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Procedures Section 3 (Financial Transactions)

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LCH LIMITED

PROCEDURES SECTION 3

FINANCIAL TRANSACTIONS
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Clearing Members should note that the PPS (in each location mentioned above) is a system 

for facilitating payment to the Clearing House of moneys due from Clearing Members to 

the Clearing House and vice versa. The giving of a commitment by a participating bank 

through the PPS to make any payment, and the receipt of that commitment by the Clearing 

House, is not to be regarded as satisfaction of any payment due to the Clearing House.

Each Clearing Member remains fully responsible for the payment to the Clearing House of 

all moneys due to the Clearing House as required, inter alia, by the Clearing Membership 

Agreement, clearing extension documentation and the Regulations, Default Rules and 

Procedures. Payment will only be recognised for this purpose if the relevant PPS bank (i) 

has performed its concentration function (being the transfer of net funds from the PPS bank 

to a central account in the name of the Clearing House), and (ii) any time permitted by the 

relevant payment system for the recall of any such payment has expired or funds received 

have been paid out to another Clearing Member using the same PPS bank.

Where payments are due to a Clearing Member, payments will be recognised by the 

Clearing House as having been made as soon as payment instructions in respect of that 

payment have been given to a PPS bank. For this purpose, a payment instruction will only 

be recognised to the extent that the Clearing House has taken steps to transfer to the PPS 

bank any such sums as may be necessary to enable that payment instruction to be performed 

by the PPS bank.

1.3.1 PPS Mandates

(a) Introduction

A Clearing Member is required to maintain a:

(i) US dollar PPS account with any US PPS bank; and

(ii) PPS bank account with any UK PPS bank in EUR, USD and GBP, 

and in each other currency in which it incurs settlement obligations, 

and provides Securities Collateral, to the Clearing House (except that 

it may maintain a PPS bank account at an Australian PPS bank for 

all of its AUD settlement and margin obligations to the Clearing 

House). A Clearing Member may use different UK PPS banks for 

different currencies.

Please refer to the Clearing House’s website following link for 

details. www.lch.com/risk-collateral-management/collateralmanagement/protected-payments-system. 

Clearing Members are responsible at all times for ensuring that their

PPS bank accounts have sufficient funds or credit lines to be able to 

meet calls from the Clearing House.

Any bank charges connected with the holding of any PPS bank 

account or related to any activity on that account must be paid by the 

Clearing Member holding the relevant account PPS mandate.
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Each Clearing Member is required to complete a standard form UK 

PPS Mandate, US PPS Mandate and, where applicable, Australian 

PPS Mandate (copies are available from 

collateral.operations@lch.com) for each bank branch at which they 

wish to operate an account before clearing can commence. The 

original of the mandate must be signed by a person with the 

appropriate authority within the Clearing Member institution and 

then forwarded to the relevant bank. A copy must also be forwarded 

at the same time to the Clearing House Onboarding Department.

(b) Currency Conversion

The Clearing House supports cross currency Collateral, which allows the 

Clearing Member to elect to use Collateral denominated in one currency in 

respect of initial and contingent margin liabilities calculated in another 

currency. Clearing Members must nominate the currency in which they 

wish to cover margin liabilities by prior arrangement with LCH Limited 

Treasury Operations.

(c) Morning PPS Calls

Clearing Members' liabilities are calculated overnight UK time. Should the 

relevant liability not be covered by acceptable forms of Collateral held by 

the Clearing House (see Section 1.6) any shortfall is called through either 

UK or Australian PPS with separate calls made for each currency. It is the 

responsibility of each Clearing Member to ensure that its PPS bank(s) meets 

all call instructions received from the Clearing House.

Confirmation of calls, as notified, must be received by the Clearing House 

from the relevant UK PPS bank(s) by 09:00 London time on the day on 

which the PPS call is made, or by 09:00 London time on the next day on 

which the Clearing House is open for business if the PPS call is made on a 

day on which the Clearing House is not open for business.

Confirmation of calls, as notified, must be received by the Clearing House 

from the relevant Australian PPS bank(s) within one hour of receipt of the 

PPS Call Instruction if the PPS Call Instruction is received on a day on 

which the Clearing House is open for business, or by 10:00 the next day on 

which LCH is open for business if the PPS Call Instruction is received on a 

day on which LCH is not open for business.

(d) Failure of a bank to confirm a PPS call within the required deadline may 

result in the Clearing Member being declared in Default. Late confirmation 

of PPS calls are reported to the regulators of the Clearing House.

(e) Intra-day PPS Calls

An intra-day margin call by the Clearing House is for same-day payments. 

GBP, EUR or USD can be used to cover margin obligations intra-day. 

Between 14:30 – 16:00 (London time), GBP and USD will be called through 

UK PPS.
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Normally the Clearing House will call intra-day margin through UK PPS 

accounts. However, where the Clearing House wishes to make such an 

intra-day call after UK PPS closes (16:00 London time), such a call will be 

made upon the Clearing Member's nominated US PPS account.

Clearing Members must designate a currency ("GBP", "EUR" or "USD")

that will be called by default during the hours of UK PPS for each 

mnemonic/sub-account. Clearing Members must request a change to the 

default currency no later than 09:30 London time in order for the change to 

be undertaken the following day. Members can submit a request to change 

their currency at the following link: http://www.lch.com/risk-collateralmanagement/collateral-management/acceptable-collateral/preferredcurrency.

The Clearing House has the ability to call US dollars in respect of an intraday margin call up until 16:00 New York time (21:00 London time).

The Clearing House may not accept delivery of US dollar cash other than in 

satisfaction of an intra-day margin call after 14:00 hours New York time.

The Clearing House must receive confirmation of payment from the 

Clearing Member's nominated PPS bank(s) within one hour of receipt of the 

intra-day call by the relevant bank.

Failure of a bank to confirm a PPS call within one hour may result in the 

Clearing Member being declared in Default. Late confirmation of PPS calls 

are reported to the regulators of the Clearing House.

(f) Use of UK and US PPS

Generally UK PPS will be used for Morning PPS Calls (including 

Contributions to the Default Fund), remitting surplus cash balances to a 

Clearing Member, and for intra-day margin calls up to 16:00 hours London 

time. However Clearing Members should be aware that the Clearing House 

reserves the right to direct a morning PPS call or intra-day margin calls 

before 16:00 hours London time to a Clearing Member's US PPS account in 

exceptional circumstances (an "Exceptional PPS Call"). The Clearing 

House will use all reasonable commercial endeavours to notify the Clearing 

Member in advance of issuing any such Exceptional PPS Call.

(g) Auto-Repay Service

The Clearing House may, at its discretion, provide an auto-repay service to 

a Clearing Member ("Auto-Repay Service") by which a Clearing Member 

may, in respect of one or more accounts it notifies to the Clearing House 

(each, a "Selected Account") and one or more of the currencies it notifies 

to the Clearing House (each, a "Selected Currency"), request that the 

Clearing House automatically repay to the Clearing Member, at such time 

as determined by the Clearing House on each business day, any cash 
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Collateral (other than Client Collateral) which is in a Selected Currency and 

which constitutes "excess collateral" (as defined in Section 1.1.2 of Section 

4 of the Procedures (Margin and Collateral)) in respect of a Selected 

Account in accordance with, and subject to, Section 1.1.2 of Section 4 of the 

Procedures (Margin and Collateral) (each such request, a "Request"). 

A Clearing Member must contact Collateral Operations in order to make a 

Request (collateral.operations@lch.com or +44 (0)20 7426 7505). A 

Clearing Member represents and warrants to the Clearing House, at the time 

at which it makes a Request, that the individual making such Request on its 

behalf is duly authorised to do so. 

The Clearing House may, at its discretion, cease to provide the Auto-Repay 

Service in respect of:

a Clearing Member, in which case it will notify the affected Clearing 

Member accordingly; or 

any Service or entirely, in which case it will notify the affected Clearing 

Members and each relevant Regulatory Body accordingly.

(h) Value Date

PPS calls and payments are for same-day value for CAD, EUR, GBP, MXN

and USD, and with value on the next day for all other currencies, subject to 

this paragraph (h). Call instructions issued on a day when the Clearing 

House is not open for business (e.g. Saturdays) are for value the next day 

for CAD, EUR, GBP, MXN and USD, and for value two days after the given 

instruction for all other currencies. Payment instructions will not be issued 

on a day when the Clearing House is not open for business. 

(i) If, under paragraph (h) above, a PPS call or payment in a particular 

currency would be due to be made for value on a day ("Payment 

Date") which is a holiday in respect of that currency, the value date 

for such PPS transaction will be the first day which is not a holiday 

in respect of that currency occurring after the Payment Date; and

(ii) in respect of AUD, if the PPS call or payment is instructed on a day

which is a holiday for AUD or on a day when the Clearing House is 

not open for business (e.g. Saturdays), the value date for such PPS 

call or payment will be the second day which is not a holiday in 

respect of AUD occurring after the Payment Date.

Example 1: 20 August is a currency holiday in the USA. The 

Clearing House is open. 21 August is not a currency holiday in the 

USA.

On 20 August, the Clearing House will issue USD instructions to 

PPS banks, and receive confirmation in response to the PPS calls on 

the same day; the value date for such calls will be 21 August.
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Example 2: 20 August is a currency holiday in the UK. The Clearing 

House is open. 21 August is a currency holiday in Japan. 22 August 

is not a currency holiday in Japan.

On 20 August, the Clearing House will issue JPY instructions to PPS 

banks, and receive confirmations in response to the PPS calls on the 

same day; the value date for such calls will be 22 August.

Example 3: 16 January is a Saturday. The Clearing House is not 

open. 18 and 19 January are not currency holidays in Australia.

On Saturday 16 January, the Clearing House will issue AUD 

instructions to PPS banks, and receive confirmations in response to 

the PPS calls on Monday 18 January; the value date for such calls 

will be Tuesday 19 January.

Example 4: 23 January is a Saturday. The Clearing House is not 

open. 26 January is a currency holiday in Australia. 25 and 27 

January are not currency holidays in Australia. 

On Saturday 23 January, the Clearing House will issue AUD 

instructions to PPS banks, and receive confirmations in response to 

the PPS calls on Monday 25 January; the value date for such calls 

will be Wednesday 27 January.

In respect of currency holidays for EUR, GBP and USD ("Major 

Currencies"), Clearing Members are required to be able to meet PPS 

calls in all of the three Major Currencies and therefore must have an 

account with a PPS bank in London in each of EUR, GBP and USD. 

If a Clearing Member’s preferred currency is available to be settled 

on a currency holiday, the Clearing House will call such preferred 

currency. In the event that such currency is not available to be settled 

on a particular day, the Clearing House will (i) firstly apply excess it 

may hold in respect of a Clearing Member and then (ii) issue calls in 

the following order:

(i) on a USD holiday, the Clearing House will issue a call in EUR;

(ii) on a GBP holiday, the Clearing House will issue a call in USD;

(iii) on a EUR holiday, the Clearing House will issue a call in GBP;

(iv) on a day which is both a USD holiday and a EUR holiday, the 

Clearing House will issue a call in GBP; and 

(v) on a day which is both a USD holiday and a GBP holiday, the 

Clearing House will issue a call in EUR.

The Clearing House will observe a Clearing Member’s currency 

preferences on all days, other than currency holidays.
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Please refer to Clearing Member House’s website and member

circulars for details of the Clearing House’s opening days and 

currency holidays. at the following link www.lch.com/newsevents/members-updates/general-information.

(i) Contingency Payment Arrangements

Clearing Members are required to have contingency payment arrangements 

in place to ensure that they can continue to meet their margin obligations in 

the event of failure of their nominated PPS bank(s). During the application 

process, the Clearing House will require the applicant to provide evidence 

of these arrangements and will test these prior to the applicant becoming a

Clearing Member. The Clearing Member will be required to provide 

evidence of their contingency payment arrangements on an ongoing basis at 

the Clearing House’s request.

(j) Recovery from Insolvent PPS Banks

In the event that payment is not completed by the relevant PPS bank, due 

to insolvency rather than technical failure, and the affected Clearing 

Member(s) make alternative payments, the Clearing House, should it make 

a recovery from the estate of the PPS bank, will credit such recovery, net 

of cost, to the accounts of the affected Clearing Members in proportion to 

the amount of the original missed payment.

1.4 New MAS Electronic Payment and Book-Entry System

1.4.1 The Monetary Authority of Singapore (“MAS”) operates a real-time gross 

settlement system (“RTGS”) known as the New MAS Electronic Payment and 

Book-Entry System (“MEPS+”). The Clearing House maintains an account on 

MEPS+, exclusively for the purpose of facilitating the transfer of cash denominated 

in SGD to and from Clearing Members in respect of initial margin.

1.4.2 The Clearing House will accept delivery of SGD via MEPS+ only to meet initial 

margin requirements. Cash collateral denominated in SGD cannot be used to meet 

the requirements of on demand initial margin calls

1.4.3 Any payment by a Clearing Member denominated in SGD to satisfy variation 

margin requirements will be collected via PPS.

1.4.4 To transfer cash denominated in SGD to the Clearing House’s account on MEPS+ 

on a certain business day, a Clearing Member or its agent must submit a valid and 

complete payment instruction on that business day. MAS will not action such 

instructions on a SGD holiday. If a payment instruction, which a Clearing Member 

or its agent submits to the Clearing House on a business day is not subsequently 

fulfilled by the Clearing Member, or if the Clearing Member inputs an incorrect 

CMS Reference (as defined in Section 1.3 of Section 4 of the Procedures

(Collateral), meaning that the Clearing House cannot action the payment 

instruction, the Clearing House will delete the instruction at 09:00 hours London 
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time on that business day. The Clearing Member or its agent must then submit a 

valid and complete instruction on the next business day.

1.4.5 The CMS process by which Clearing Members may transfer cash denominated in 

SGD to the Clearing House is described in Section 1.3 of Section 4 of the 

Procedures (Collateral). In accordance with, and subject to, that process, the 

amount of the Clearing Member’s payment will appear as Collateral against that 

Clearing Member’s account and may be used to satisfy the Clearing Member’s 

initial margin liabilities.

1.4.6 If a Clearing Member instructs a payment to the Clearing House’s account on 

MEPS+ on a certain business day, the value date for that payment will be that 

business day. The Clearing House will process only same day value instructions 

and will not process forward-dated instructions.

1.4.7 PPS calls and payments in respect of SGD to satisfy variation margin requirements 

are for value on the next business day.

1.4.8 The Auto-Repay Service described in Section 1.3.1(g) of these Procedures is not 

available in respect of MEPS+.

1.4.9 Clearing Members intending to use this service to transfer cash denominated in 

SGD to the Clearing House to satisfy initial margin requirements must notify the 

Clearing House in advance. Further details (including information about deposit 

and withdrawal deadlines) are available on the Clearing House’s website. at the 

following link:

https://www.lch.com/collateral-management/ltd-collateral-management/ltdacceptable-collateral/ltd-acceptable-cash

1.5 Acceptable Forms of Collateral

The Clearing House accepts certain types of Collateral as determined by the Clearing 

House from time to time. Please refer to the Clearing House’s website following link for 

further details. 

www.lch.com/risk-collateral-management/collateral-management/acceptable-collateral.

The Clearing House may vary, at its discretion, the standard requirements and valuation 

procedures set out in this Section 1.5, either generally or in a particular case, without 

giving prior written notice to Clearing Members. Further, the Clearing House may vary 

the types of Collateral acceptable to it.

1.5.1 Cash

In order not to fall within the scope of deposit-taking regulations applying to banks 

and similar institutions, the Clearing House can accept cash from Clearing 

Members only in relation to current or anticipated obligations.
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Cash used as Collateral need not be provided in the same currency as that of the 

liability. In such cases, currencies will be notionally converted with reference to 

quoted exchange rates determined at approximately 16:45 London time the 

previous business day.

Clearing Members must give the Clearing House’s Treasury Operations no less 

than two business days' notice of their intention to substitute existing cash 

Collateral with non-cash Collateral or cash Collateral in a different currency where 

the amount of cash is GBP 50 million or greater. Where a Clearing Member fails 

to give such notice, the Clearing House may decline to transfer or release the cash 

Collateral to be withdrawn until the end of the required notice period.

1.5.2 Securities

Please refer to the Clearing House’s following pages on our website for prevailing 

haircuts and the types of notes on cCollateral acceptable to the Clearing House as 

Collateral. :

http://www.lch.com/risk_management/ltd/acceptable_collateral.asp

1.5.3 Value Notification

Clearing Members may obtain details on the value ascribed to Collateral recorded 

to their account viathe relevant reports available on the Clearing House website

portal:

(a) the CMS; and/or

(b) SWIFT message sent from the Clearing House to the relevant Clearing 

Member. 

Please refer to the Clearing House’s website following pages on our secure website 

for haircuts on Collateral.:

www.lch.com/risk-collateral-management/ltd-collateral-management/ltdacceptable-collateral/ltd-acceptable

1.5.4 Use of Credits as Collateral

The following credit amounts are not paid in cash, but may (subject to the 

restrictions described below) be offset against certain specific margin obligations, 

with the result that the relevant Clearing Member will need to provide less 

Collateral in respect of those margin obligations:

(a) EquityClear credit contingent margin may be used to offset EquityClear 

debit contingent variation margin and initial margin across currencies; and

(b) Rates Exchange credit contingent variation margin may be used to offset 

Rates Exchange debit contingent variation margin and initial margin across 

currencies.
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1.6 Distribution of Collateral

1.6.1 Collateral Application

The Clearing House will apply Collateral (in turn) to each liability in relation to the 

Collateral utilisation fees charged in respect of each collateral group categorisation by the 

Clearing House, as published from time to time on the Clearing House’s website, at the 

following link 

www.lch.com/risk-collateral-management/ltd-collateral-management/ltd-fees-collateral,

such that the least expensive collateral group will be applied first and, thereafter, each 

collateral group will be applied in ascending order of fees. In the event that the amount 

charged is the same for more than one collateral group, they will be applied in alphabetical 

order by Collateral group.

1.6.2 Cash Currency Preference

Clearing Members may nominate the sequence of cash Collateral distribution.

In the absence of a nominated sequence of currency preferences, a Clearing 

Member’s liabilities will be covered by cash in the same currency as the liability. 

This means that a GBP liability will be covered in GBP cash, a EUR liability will 

be covered in EUR cash and so forth. Any further liabilities in the relevant currency 

will be covered by cash called via PPS.

Clearing Members may define their own sequence of cash Collateral utilisation for 

each mnemonic and each account type (i.e. House or Client). The sequence does 

not have to be on a like for like basis and a Clearing Member may choose any 

eligible currency to cover its liability (for example, a GBP liability can be covered 

in EUR cash).

Any changes to a Clearing Member’s nominated currency sequence, or a request 

relating to excess cash currency balances in a particular currency, should be notified 

to the Clearing House by providing a minimum of two business days’ notice.

1.6.3 Proprietary Account – SwapClear 

The Clearing House will, in general, apply available Standard Collateral (in the 

order specified in Sections 1.6.1 and 1.6.2) to satisfy the liabilities of a SwapClear 

Clearing Member in respect of its Proprietary Account, before it applies available 

Overnight Funding Collateral (in the order specified in Sections 1.6.1 and 1.6.2) to 

such liabilities, but may, at its sole discretion, determine to apply some or all 

available Overnight Funding Collateral before applicable Standard Collateral to 

any such liabilities. 

The following Procedures are not in any way intended to restrict, vary 

or alter the Clearing House's rights to apply any Collateral held by it 

to meet the Clearing Member's liabilities and obligations to the 

Clearing House.
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VAT on accommodation charges is subject to the standard rate; some 

markets may be excluded.

1.7.3 Cash Balance Interest Rate

The Clearing House applies interest to a Clearing Member’s cleared cash balances. 

The following rates are applied:

(a) LDR – London Deposit Rate – Tthe rate at which the Clearing House may

pay or charge interest on credit cash balances (excluding Contributions). 

The LDR calculation methodology utilises published market rates minus a 

spread. The current spread rates are published on the Clearing House’s 

website at the following link; and:

https://www.lch.com/collateral-management/ltd-collateralmanagement/ltd-fees-collateral;

and

(b) CDR – Client Deposit Rate – Tthe rate at which the Clearing House may 

pay or charge interest on credit cash balances on Client Accounts. The CDR 

calculation methodology utilises published market rates minus a spread. The 

current spread rates are published on the Clearing House’s website at the 

following link.:

https://www.lch.com/collateral-management/ltd-collateralmanagement/ltd-fees-collateral. 

Where the Clearing House provides Clearing Members with at least three days’ 

written notice (which may be way of member circular), the Clearing House may 

increase or decrease the LDR by up to 10bps. The foregoing shall not apply in the 

event of extreme market conditions, during which the Clearing House may freely 

and without notice increase or decrease the LDR for up to five consecutive Business 

Days. 

Where the Clearing House provides Clearing Members with two weeks’ written 

notice (which may be way of member circular), the Clearing House may increase 

or decrease the CDR. In the event of extreme market conditions, the Clearing House 

may freely and without notice increase or decrease the CDR for up to five 

consecutive Business Days.

1.8 Fees

Details of fees and refunds pending are collated during the month.

An invoice or credit note is produced detailing the fees to be posted to collateral accounts.

The invoice/credit note displays the type of fee, contract, future or option type, currency, 

fee rate, volume, fee amount, VAT amount, sub totals for each fee class and the overall 

total posted to a collateral account.
9 

Appendix VI

Procedures Section 4 (Margin and Collateral)

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LCH LIMITED

PROCEDURES SECTION 4

MARGIN AND COLLATERAL
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1. Collateral

1.1 GENERAL INFORMATION

The Clearing House is, at its sole discretion, entitled to determine what will be 

acceptable to it as Collateral and to determine when collateral will cease to be acceptable 

as Collateral.

If any cash, instrument or security, lodged in accordance with any of the following 

Procedures, is in any way found to be unacceptable, it will immediately be given a 

zero value for the purposes of calculating the value of the Clearing Member Current 

Collateral Balance (the "Current Collateral Value").

1.1.1 Instructions

The Clearing House accepts instructions to lodge, release and transfer cash, 

securities and triparty Collateral via its online CMS and/or any other 

operational process the Clearing House determines. 

If there is an outage of the CMS (or if the Clearing House decides it is 

appropriate), a Clearing Member may send certain instructions using the 

appropriate form, by email to:

collateral.clientservices@lseg.com collateral.ops. uk@lch.com

Collateral Operations can be contacted on +44 20 7426 7505 +44 (0)20 7426 

7593.

A copy of the appropriate form is available here:

LCH Ltd Acceptable Securities | LCH Group

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-collateral-management-system

The Clearing House may act upon instructions or communications appearing 

to have been issued by or on behalf of, or to have come from, a Clearing 

Member. These will be accepted by the Clearing House as genuine even if, for 

example, they are later found:

(a) to be inaccurate, whether in whole or in part; or

(b) not to have been given by the Clearing Member or with the authority 

of the Clearing Member.

The Clearing House will only accept delivery of non-cash Collateral from a 

Clearing Member in accordance with these Procedures and will not sell or 

purchase cash or non-cash Collateral for Clearing Members, except in so far as 

it is acting under its Default Rules and related Regulations or in relation to 

Exchange Rules.
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The Clearing House reserves the right to require a Clearing Member to 

execute revised versions of the Deed of Charge and Client Consent 

documentation whenever the Clearing House, at its sole discretion, considers 

that it would be appropriate to do so.

The Clearing House reserves the right to change the information required on 

instructions received via the CMS or via the relevant form whenever the 

Clearing House, at its sole discretion, considers that it would be appropriate to 

do so.

1.1.2 Excess Collateral

The Clearing House shall, at least once on each business day, notify each 

Clearing Member of the Required Margin Amount and the Total Required 

Margin Amount.

If a Clearing Member's Current Collateral Value exceeds the sum of that 

Clearing Member's Total Required Margin Amount and any other amounts 

which the Clearing Member is required to transfer to the Clearing House under 

Applicable Law (such excess, "excess collateral value"), then that Clearing 

Member may, in accordance with Sections 1.3 and 1.4 of these Procedures, 

Section 1.3.1(f) of Section 3 of the Procedures (Financial Transactions)

and/or any other operational process the Clearing House determines, request 

that some or all of the Collateral comprising its Clearing Member Current 

Collateral Balance (other than any Client Collateral) having a value not 

exceeding the excess collateral value (such Collateral being referred to in 

these Procedures as "excess collateral") be returned or repaid by the Clearing 

House to, or to the order of, that Clearing Member. For the avoidance of 

doubt, for the purposes of determining whether there is an excess collateral 

value (for the purposes of this Section 1.1.2) at the time of the Clearing 

Member’s request, the Clearing Member’s Total Required Margin Amount 

shall not include the amounts of any margin requirements from the Clearing 

Member to the Clearing House (whether or not demanded of the Clearing 

Member) in respect of which the time for performance has not occurred at the 

time of such request.

In the event that the Clearing House expressly notifies the Clearing Member of 

a positive excess collateral value and that the Clearing House intends to levy a 

charge in respect of the excess collateral with effect from a date notified in 

that notification, and the Clearing Member does not take all reasonable steps 

to eliminate the positive excess collateral value before the date so notified, the 

Clearing House may, in its discretion, but only from the date so notified, 

charge the Clearing Member in respect of the excess collateral at the rate of 1 

basis point per day until the excess collateral is eliminated. Payment of this 

charge shall be collected on a monthly basis through that Clearing Member’s 

PPS sterling account.

If the Clearing House has received a request to return excess collateral, the 

Clearing House shall promptly take such steps as are necessary to transfer the 

amount of excess collateral specified in that request to or to the order of the 
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1.2 DOCUMENTATION

1.2.1 Deed of Charge

Clearing Members wishing to transfer non-cash Collateral to the Clearing 

House must complete and maintain a Deed of Charge. This document 

establishes a fixed charge over the Clearing Member's interests pursuant to the 

custody relationship which arises upon specified non-cash Collateral being

transferred into an account with the Clearing House by the Clearing Member.

The document is required to be executed in accordance with the instructions 

which accompany it. The Deed of Charge covers, inter alia, non-cash 

Collateral that is transferred to the Clearing House via bilateral settlement or 

via triparty arrangements. To operate triparty arrangements with the Clearing 

House, additional documentation must also be executed with the relevant 

triparty provider.

The Deed of Charge is available from the Clearing House. Where a Clearing 

Member transfers non-cash Collateral to the Clearing House in respect of a 

Proprietary Account and a Client Account, it must execute two separate Deeds 

of Charge.

1.2.2 Segregation Rules

Instructions relating to transfers and requests for the return of Collateral must 

indicate the particular account to which they relate. Any Collateral transferred 

to the Clearing House in respect of an account will be applied against the 

Clearing Member's margin liabilities on such account.

Collateral transferred to the Clearing House in respect of a Clearing Member's 

Client Account will not be applied by the Clearing House to the Clearing 

Member’s liabilities on a Proprietary Account (see Regulation 10(d)

(Accounts)) or on another Client Account, except in the case of a Cross-ISA 

Client Excess Deduction or pursuant to Rule 15(a)(ii) of the Default Rules or 

any Insufficient Resources Determination Rule.

Collateral transferred to the Clearing House in respect of a Clearing Member's 

Proprietary Account may be applied by the Clearing House towards the 

payment of any sum whatsoever due by the Clearing Member to the Clearing 

House, save that, subject to Rule 8(d) of the Default Rules and any Insufficient 

Resources Determination Rule, no Collateral (other than House Excess and, to 

the extent not already included in the relevant Clearing Member Current 

Collateral Balance, Client Buffer) transferred in respect of a Clearing 

Member's Proprietary Account shall be applied on or towards payment or 

satisfaction of any of the Clearing Member's liabilities to the Clearing House 

on any of the Clearing Member's Client Accounts.

1.2.3 Clearing Client Collateral

Where a Clearing Member wishes to transfer a Clearing Client's Collateral to 

the Clearing House, the Clearing Member must, inter alia, ensure that at all 

times it remains expressly agreed with the Clearing Client that the Clearing 
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Member may charge the Collateral to the Clearing House, on the Clearing 

House's terms and free of the Clearing Client's or another owner's interest, to 

secure the Clearing Member's obligations to the Clearing House.

Where a Clearing Client's Collateral is to be transferred to the Clearing House, 

the Clearing Member must ensure that a Client Consent Form is completed by 

the beneficial owner (see Schedule 1).

The Clearing House gives no undertaking that, on the Default of a Clearing 

Member, it will not utilise Clearing Clients' Collateral which has been 

transferred to it by a Clearing Member, before utilising any other form of 

Collateral the Clearing House may hold.

Clearing Members are warned that the transfer of Collateral and the 

grant of a security interest are complex legal matters. The Rulebook and 

any communication with the Clearing House (whether of an oral or 

written nature) are not to be taken as legal or other advice. A Clearing 

Member should seek its own independent professional advice.

1.3 INSTRUCTIONS VIA CMS

The Clearing House will action instructions relating to Collateral that have been input 

and authorised via the CMS in accordance with, and subject to, this Section 4 of the 

Procedures.

For non-cash instructions to transfer securities and triparty Collateral, the details input 

on the CMS will form the basis of the matching instruction sent to the relevant 

Depository. Clearing Members must ensure that the details are input correctly in order to 

avoid unmatched transactions.

For cash instructions via PPS, the details the Clearing Member inputs into the CMS 

will form the basis of the call or the SWIFT MT202 payment instruction sent to the 

relevant PPS Bank.

For cash instructions via any real-time gross settlement system (“RTGS”):

1.3.1 The Clearing Member must input the relevant details into the CMS, to ensure 

that the Clearing House credits/debits the correct amount of cash to the 

Clearing Member’s Collateral Account.

1.3.2 If the Clearing House’s policies in respect of concentration limits are satisfied, 

the Clearing Member will supply the Unique End-to-End Transaction 

Reference (the “UETR”) of the SWIFT MT202 payment instruction into the 

UETR field in the CMS.

1.3.3 If the payment does not match up with an authorised CMS instruction 

featuring the same UETR, the Clearing House will return the cash to the 

Clearing Member on or after the cash deadline for the relevant currency, on 

the business day the payment was credited to the Clearing House’s account in 

the relevant RTGS.
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The deadlines are published at the following link of the Clearing House’s web 

site, under the heading Cash Collateral Deposit and Withdrawal Cut-Off 

Times:

LCH Ltd Acceptable Cash | LCH Group

https://www.lch.com/collateral-management/ltd-collateral-management/ltdacceptable-collateral/ltd-acceptable-cash

It is the responsibility of the Clearing Member to input a cancellation request of any 

incorrectly input instruction and to subsequently input the correct details in a new 

instruction. Please note that it may not be possible to cancel an instruction (please 

refer to Section 1.4.7 below for further details).

The Clearing House will update the status of an instruction in the CMS to reflect the 

status of the corresponding instruction at the relevant Depository, Central Bank or 

PPS Bank. On settlement of the relevant transaction at the relevant Depository, 

Central Bank or PPS Bank, the Clearing House will reflect the balance of the 

securities or cash on the relevant account of the Clearing Member and take them into 

account for the purposes of calculating the Clearing Member's Current Collateral 

Value.

The Clearing House will not be liable for any losses to Clearing Members or third 

parties caused by non-settlement or by a delay in settlement as a result of the actions 

or omissions of a Depository, Central Bank or PPS Bank or the Clearing Member 

(save for any liability which may not be excluded by Applicable Law).

1.4 SETTLEMENT PROCEDURES – SECURITIES PROVIDED BY A 

CLEARING MEMBER TO THE CLEARING HOUSE ON A BILATERAL 

BASIS

All transactions to transfer non-cash Collateral from a Clearing Member to the Clearing 

House or from the Clearing House to a Clearing Member will be executed free of 

payment. Members are encouraged to instruct with provisions to allow settlement in late 

day windows (e.g. Daylight, Priority 90 and other such local market indicators).

1.4.1 Instruction Deadlines

Clearing Members may input security instructions via the CMS at any time.

Instructions will only be actioned by the Clearing House during operational 

hours.

The Collateral Operations’ operational hours are Monday to Friday 07:00 –

21:00 (UK time).

For settlement in Austraclear, the Collateral Team in Sydney are available 

Monday to Friday 09:00 – 16:30 (AEST).

Instruction deadlines are available on the Clearing House’s LCH website at 

the following location.:
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https:/ /www.lch.com/collateral-management/ltd-collateral-management/ltdacceptable-collateral/ltd-acceptable-securities

1.4.2 Deliveries to and from Local Markets

The Clearing House is bound by the settlement deadlines of the relevant 

Depository. Clearing Members should refer to the relevant Depository for 

these deadlines. Note that for transactions from local markets the settlement 

deadline may be earlier than the Clearing House hours of operation and should 

therefore be instructed the day before the settlement date (i.e. on S-1).

Instructions to the Clearing House must be provided at least one hour before 

the market deadline for same day settlement.

For example:

Deliveries from Local Market

Depository

Deadline

Instruction Deadline 

to Clearing House 

(UK time)

Japan 07:55 17:00 on S-1

Belgium 14.:0 13:50 on S

Italy 15:00 14:00 on S

1.4.3 Transfer of Securities Collateral from a Clearing Member to the Clearing 

House

Subject to Section 1.1.8, instructions for the transfer of securities Collateral

from a Clearing Member to the Clearing House that are input via the CMS or, 

when directed by the Clearing House, via one of the forms available on the 

website prior prior to the deadlines advised by the Clearing House for same 

day settlement will be actioned and settled transactions will be taken into 

account for the purposes of calculating the Clearing Member's Current 

Collateral Value following settlement.

Transfer instructions for future settlement dates will (subject to Section 1.1.8)

be instructed same day if received prior to the deadlines. Instructions received 

after the deadlines will (subject to Section 1.1.8) be instructed the following 

day only where the intended settlement day is in the future. The Clearing 

House will reject instructions for same day settlement, which are received 

after the deadline.

1.4.4 Transfer of Securities Collateral from the Clearing House to a Clearing 

Member 

(a) Release where Sufficient Collateral is Available

Instructions to release existing securities Collateral of a Clearing 

Member that are received before the deadlines above for same day 
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1.4.8 Instruction Status

The status of an instruction can be monitored via the CMS. Statuses reflect the 

status of the instruction at the Clearing House and not at the relevant 

Depository, Central Bank or PPS Bank. Please refer to the CMS user guide for 

status definitions.

1.5 TAX ARRANGEMENTS

1.5.1 US Securities

For tax reasons, the Clearing House is required to segregate foreign (i.e. nonUS) owners' securities from US owners' securities. Clearing Members must 

deliver securities to the correct account. The Clearing House operates accounts 

with Citibank N.A., BMO Harris and Bank of New York Mellon.

In order to reduce or to eliminate US withholding tax, the correct tax 

documentation must have been provided in respect of each owner. To this end, 

Clearing Members will be expected to provide one of the forms noted below 

to the Clearing House. A current form will be required for each ownerClearing 

Member (i.e. the Clearing Member or the person named in the Client Consent 

Form).

The relevant forms will be valid for three calendar years and will normally be 

one of:

(a) 'W-9 (Request for Taxpayer Identification Number and Certification)'; 

which applies to a US corporation including a foreign branch of a US 

corporation and is valid indefinitely; or

(b) 'W-8BEN (Certificate of Foreign Status)'; which applies to nonresident alien individuals, foreign corporations, partnerships and 

estates; and

Clearing Members may obtain originals of forms W-8BEN and W-9 from 

Collateral Operations.

Note: The Clearing House's arrangements with its Depositories only allow 

for securities holdings of US corporations or foreign (i.e. non-US) 

entities or individuals. Clearing Members who wish to discuss the 

possibility of lodging securities belonging to owners excluded from 

this arrangement should contact Collateral Operations.

The Clearing House's acceptance of US securities does not indicate any 

responsibility for the adequacy or otherwise of tax documentation. Any 

queries in relation to these tax forms should be referred to your company 

accountant or professional advisers.

Completed tax forms should be returned to Collateral Operations for onward 

transmission to the relevant Depository.
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Clearing Members any relevant recovery in withholding tax credited to the 

Clearing House's account by the relevant Depository.

In certain cases, the Clearing House or the relevant Depository will withhold 

tax on a Coupon if the correct documentation is not lodged with the Clearing 

House or such Depository.

1.6 REFERENCES

These Procedures should be read in conjunction with the relevant contractual 

provisions, user guides and/or manuals of the relevant Depository. Please also refer to 

each relevant Depository for the relevant settlement deadlines in particular those for 

deliveries from local markets to Clearing House accounts.

1.7 CONTINGENCY ARRANGEMENTS

In the event of an outage of the CMS, the Clearing House will notify Clearing 

Members via member circular and Clearing Members may send certain instructions, 

using the appropriate form, to the Clearing House by email (see Section 1.1.1 of these 

Procedures). Forms are available on the Clearing House’s website.here:

https://www.lch.com/risk-collateral-management/ltd-collateral-management/ltdcollateral-management-system

Normal service hours will apply to such instructions. However, deadlines for manual 

instructions are earlier. Please refer to the following page of the LCH website for 

details:

https://www.lch.com/risk-collateral-management/ltd-collateral-management/ltdacceptable-collateral/ltd-acceptable

The Clearing House will notify Clearing Members via a member circular when the 

CMS is available again. 

1.8 TRIPARTY SERVICE OF EUROCLEAR AND CLEARSTREAM 

1.8.1 General Information

In order for a Clearing Member to transfer securities to the Clearing House 

using a triparty arrangement, such Clearing Member, the relevant triparty 

agent and the Clearing House must have completed and signed the relevant 

documentation. Please contact the Clearing House on +44 (0)207 426 7237 for 

more information.

Clearing Members may execute a triparty transaction to cover initial margin 

requirements at the Clearing House. Triparty instructions must be provided to 

the Clearing House via the CMS. Instructions may be input for future 

settlement dates. 

If a Clearing Member is unable to make triparty instructions via the CMS, it 

will be possible to instruct using the relevant triparty contingency forms found 
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at the following page ofon the LCH Clearing House’s website. :

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-collateral-management-system

Triparty transactions must be a minimum of one million GBP, EUR or USD. 

Settlement deadlines can be found on the LCH Clearing House’s website at 

the following location.:

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-collateral-management-system

Sufficient Collateral:

Where the Clearing Member has sufficient Collateral available, the closure of 

a triparty transaction or the decrease of the transaction amount of a triparty 

transaction will be processed on the same day and the resulting reduction of 

Collateral will be taken into account for the purpose of calculating the 

Clearing Member's Current Collateral Value.

Insufficient Collateral:

Where the Clearing Member has insufficient Collateral to close a triparty 

transaction or to decrease the transaction amount of a triparty transaction, the 

Clearing Member's Current Collateral Value will be deemed to be decreased 

overnight and, the following morning, the Clearing House will only close the 

triparty transaction or decrease the transaction amount of the triparty 

transaction after 09.00 (UK time) when any PPS cash calls have been 

confirmed.

Triparty deficits:

In the event that the Clearing House determines that a shortfall exists under a 

triparty arrangement, whether because of a decrease in the value of securities 

provided or otherwise, and such shortfall has not been made good by the 

inclusion of additional securities, the Clearing House shall be entitled to make 

one or more PPS cash calls in respect of such shortfall. Cash calls in relation 

to shortfalls will be called in accordance with Section 1.3 (Protected Payments 

System (PPS)) of Section 3 of the Procedures (Financial Transactions). Such 

cash shall either be credited to the Clearing Member upon the Clearing 

Member or the relevant Custodial Segregated Client making good the deficit 

pursuant to the triparty arrangement or retained as Collateral if the Clearing 

Member or a relevant Custodial Segregated Client does not make good the 

deficit.

1.9 CUSTODIAL SEGREGATED ACCOUNTS 

A Clearing Member may, in respect of a Custodial Segregated Account, affirm an 

increase or decrease of the transaction amount of a triparty transaction between the 
Clearing House Procedures Collateral

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Schedule 1

CLIENT CONSENT FORM

Client Consent Form can be found at the following link:

https://www.lch.com/risk-collateral-management/ltd-collateral-management/ltdacceptable-collateral/ltd-acceptable
10

Appendix VII

Sponsored Clearing Procedures of LCH Limited

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SPONSORED CLEARING PROCEDURES OF

LCH LIMITED
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1.8.4 Reduction in Financial Resources

All Sponsored Members and Agent Members must immediately notify the 

Clearing House of any significant reduction (usually 10 % or more), from the 

figures shown in their last financial returns.

1.9 Additional Requirements

Notification of Changes of Ownership

Sponsored Members and Agent Members are required, under the terms of their 

Sponsored Membership Agreement or Agent Membership Agreement, (as applicable) 

to notify or pre-notify the Clearing House of changes in controlling holdings (defined 

as the exercise or control of 20% or more of the voting power of the firm). The

Clearing House recognises that, in the case of Sponsored Members and Agent 

Members which are part of large financial groups, changes in controllers may occur 

with relative frequency, which may only be known after the event and are unlikely to 

be significant to the Clearing House. However, in cases of changes in ownership, and 

particularly where those potentially acquiring a dominant stake in the firm are not 

known to the Clearing House, Sponsored Members and Agent Members are required 

to pre-notify the Clearing House of their plans. The proposed change of ownership 

may be subject to an approval process involving the Risk Committee and Board of the 

Clearing House.

1.10 Other Conditions

The Clearing House may, at any time, impose additional conditions in relation to 

continued Sponsored Member or Agent Member status, and at any time vary or 

withdraw any such conditions, provided that any such conditions which restrict, or 

may be considered to have the effect of restricting, access of a Sponsored Member or 

Agent Member to the Clearing House shall be imposed only in circumstances where, 

and to the extent that, their object is to control the exposure of the Clearing House to 

risk. Sponsored Members and Agent Members are referred to the Clearing House's 

website at https://www.lch.com/risk-collateral-management/group-riskmanagement/risk-management-ltd for further information about the relevant internal 

risk management policies and procedures of the Clearing House. 

The relevant additional conditions imposed on a Sponsored Members or Agent 

Member may include, but are not limited to, a requirement to transfer additional cash 

or non-cash Collateral to the Clearing House, as determined by the Clearing House.
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Each Sponsored Member remains fully responsible for the payment to the Clearing 

House of all moneys due to the Clearing House for its account as required, inter alia, 

by the Sponsored Membership Agreement, clearing extension documentation and the 

SC Regulations, SC Default Rules and SC Procedures. 

Each Agent Member remains fully responsible for the payment to the Clearing House 

of all moneys due to the Clearing House for the account of its Sponsored Members as

required, inter alia, by the Agent Membership Agreement, clearing extension 

documentation and the SC Regulations, SC Default Rules and SC Procedures.

Payment will only be recognized for this purpose if the relevant PPS bank: (i) has 

performed its concentration function (being the transfer of net funds from the PPS 

bank to a central account in the name of the Clearing House); and (ii) any time 

permitted by the relevant payment system for the recall of any such payment has 

expired or funds received have been paid out to another Clearing Member, Agent 

Member or Sponsored Member using the same PPS bank.

Where payments are due to a Sponsored Member or Agent Member, payments will be 

recognised by the Clearing House as having been made as soon as payment 

instructions in respect of that payment have been given to a PPS bank. For this 

purpose, a payment instruction will only be recognised to the extent that the Clearing 

House has taken steps to transfer to the PPS bank any such sums as may be necessary 

to enable that payment instruction to be performed by the PPS bank.

3.3.1 PPS Mandates

(a) Introduction

An Agent Member is required to maintain a:

(i) US dollar PPS account with any US PPS bank; and

(ii) PPS bank account with any UK PPS bank in EUR, USD and 

GBP, and in each other currency in which it incurs settlement

or margin obligations, and provides Securities Collateral, to the

Clearing House. An Agent Member may use different UK PPS 

banks for different currencies.

Where a Sponsored Member is providing Back-up Agent Services or, 

where applicable, Back-up Paying Agent Services, such Sponsored 

Member is required to maintain a:

(i) US dollar PPS account with any US PPS bank; and

(ii) PPS bank account with any UK PPS bank in EUR, USD and 

GBP, and in each other currency in which it incurs settlement 

or margin obligations, and provides Securities Collateral, to the 

Clearing House. A Sponsored Member may use different UK 

PPS banks for different currencies.
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Please refer to the Clearing House’s website following link for details.:

www.lch.com/risk-collateral-management/collateralmanagement/protected-payments-system

Agent Members are responsible at all times for ensuring that their PPS 

banks accounts have sufficient funds or credit lines to be able to meet 

calls from the Clearing House for their own account and/or the account 

of their Sponsored Members.

Sponsored Members providing Back-up Agent Services and where 

applicable, Back-up Paying Agent Services are responsible at all times 

for ensuring that their PPS banks accounts have sufficient funds or 

credit lines to be able to meet calls, for their own account, from the 

Clearing House.

Any bank charges connected with the holding of any PPS bank account 

or related to any activity on that account must be paid by the Agent 

Member or relevant Sponsored Member, as applicable, holding the 

relevant account PPS mandate.

Each Agent Member and each Sponsored Member providing Back-up 

Agent Services and, where applicable, Back-up Paying Agent Services,

is required to complete a standard form UK PPS Mandate and US PPS 

Mandate (copies are available from collateral.clientServices@lch.com) 

for each bank branch at which they wish to operate an account before 

clearing can commence. The original of the mandate must be signed 

by a person with the appropriate authority within the Agent Member, 

or relevant Sponsored Member institution (as applicable) and then 

forwarded to the relevant bank. A copy must also be forwarded at the 

same time to the Clearing House Onboarding Team.

onboarding@lch.com

(b) Currency Conversion

The Clearing House supports cross currency Collateral, which allows 

the Agent Member to elect to use Collateral denominated in one 

currency in respect of initial and contingent margin liabilities 

calculated in another currency. Agent Members must nominate the 

currency in which they wish to cover margin liabilities for their own 

account and/or the account of their Sponsored Members, by prior 

arrangement with LCH Limited Collateral Operations.

A Sponsored Member providing Back-up Agent Services and where 

applicable, Back-up Paying Agent Services can elect to use Collateral

denominated in one currency in respect of initial and contingent 

margin liabilities calculated in another currency. A Sponsored Member 

providing Back-up Agent Services and where applicable, Back-up 

Paying Agent Services must nominate the currency in which they wish 

to cover margin liabilities for their own account, by prior arrangement 

with LCH Limited Collateral Operations.
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(c) Morning PPS Calls

Sponsored Members' and Agent Members' liabilities are calculated 

overnight UK time. Should the relevant liability not be covered by 

acceptable forms of Collateral held by the Clearing House (see Section 

3.4) any shortfall is called through UK PPS with separate calls made 

for each currency and each collateral sub-account. It is the 

responsibility of each Agent Member and relevant Sponsored Member 

to ensure that its UK PPS bank(s) meets all payment instructions 

received from the Clearing House.

Confirmation of PPS calls, as notified, must be received by the 

Clearing House from the relevant UK PPS bank(s) by 09:00 London 

time on the day on which the PPS call is made. 

Failure of a bank to confirm a PPS call within the required deadline 

may: (i) in respect of the Agent Member performing the Agent 

Member Services, constitute an Agent Close-out Event; or (ii) with 

respect to the Sponsored Member performing Back-up Agent Services 

and where applicable, the Back-up Paying Agent Services, result in a 

Default in respect of such Sponsored Member.

Where with respect to an Agent Member performing the Back-up 

Agent Services and where, applicable, the Back-up Paying Agent 

Services, such Agent Member's nominated PPS bank fails to confirm a 

PPS call within the required deadline and there is not sufficient Agent 

Buffer in the relevant Agent Buffer Account to cover the relevant 

margin call, such Agent Member’s corresponding Sponsored Member

will be required to meet such margin call themselves within one hour 

of being notified of the failed PPS call. Late confirmation of PPS calls 

are reported to the regulators of the LCH Group.

(d) Intra-day PPS Calls

An intra-day margin call by the Clearing House is for same-day 

payments. GBP, EUR or USD can be used to cover margin obligations 

intra-day. Between 14:30 – 16:00 (London time) only GBP and USD 

will be called through UK PPS.

Normally the Clearing House will call intra-day margin through UK 

PPS accounts. However, where the Clearing House wishes to make 

such an intra-day call after UK PPS closes (16:00 London time), such a 

call will be made upon the Agent Member's or relevant Sponsored 

Member's nominated US PPS account.

Agent Members must designate a currency ("GBP", "EUR" or "USD")

that will be called by default during the hours of UK PPS for each 

mnemonic/sub-account. Agent Members and Sponsored Members 

providing Back-up Agent Services and where applicable, the Back-up 

Paying Agent Services may request a change to the default currency no 

later than 09:30 London time in order for the change to be undertaken 
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the following day. Agent Members and relevant Sponsored Member's 

may submit a request to change their currency at the following link:

http://www.lch.com/risk-collateral-management/collateralmanagement/acceptable-collateral/preferred-currency

The Clearing House has the ability to call US dollars in respect of an 

intra-day margin call up until 16:00 New York time (21:00 London 

time).

It is noted that the Clearing House will not accept delivery of US dollar 

cash other than in satisfaction of an intra-day margin call after 14:00 

hours New York time.

The Clearing House must receive confirmation of payment from the 

Agent Member's or, as applicable, relevant Sponsored Member's 

nominated PPS bank(s) within one hour of receipt of the intra-day call 

by the relevant bank branch.

Failure of a bank to confirm a PPS call within one hour may: (i) in 

respect of the Agent Member performing the Payment Services, 

constitute an Agent Close-out Event; or (ii) with respect to the

Sponsored Member performing Back-up Agent Services and where

applicable, the Back-up Paying Agent Services, result in such 

Sponsored Member being declared in default. 

Where with respect to an Agent Member performing the Back-up 

Agent Services and where, applicable, the Back-up Paying Agent 

Services, such Agent Member's nominated PPS bank fails to confirm a 

PPS call within one hour and there is not sufficient Agent Buffer in the 

relevant Agent Buffer Account to cover the relevant margin call, the 

Sponsored Member attributed to such Agent Member may elect to 

meet such margin call themselves within one hour of being notified of

the failed PPS call. Late confirmation of PPS calls are reported to the 

regulators of the LCH Group.

(e) Auto repay

Agent Members may, provided that there has not been an Agent Closeout Event, request that they are automatically repaid any excess cash 

balances that remain on their accounts or the accounts of such Agent 

Member's corresponding Sponsored Member, at the end of each day

where the relevant Clearing Service of which the Agent Member is a 

member provides an auto-repay mechanism. Agent Members must 

contact Collateral Operations in order to have auto-repay applied to 

their accounts or the accounts of such Agent Member's corresponding 

Sponsored Member (collateral.clientservices@lch.com or +44 (0)20 

7426 7505).

Those Agent Members who are not on auto-repay or whose 

corresponding Sponsored Member accounts are not on auto-repay may 
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These SC Procedures indicate which part of the PPS system will be 

used in the normal course of events for making PPS calls. Generally 

UK PPS will be used for morning PPS calls (including Contributions 

to the Default Fund), remitting surplus cash balances to an Agent 

Member and for intra-day margin calls up to 16:00 London time. 

However, Agent Members and relevant Sponsored Members should be 

aware that the Clearing House reserves the right to direct a morning 

PPS Call or intra-day margin calls before 16:00 London time to an

Agent Member's or, as applicable, relevant Sponsored Member's US 

PPS account in exceptional circumstances (an “Exceptional PPS 

Call”). The Clearing House will use all reasonable commercial 

endeavours to notify the Agent Member or, as applicable, relevant 

Sponsored Member in advance of issuing any such Exceptional PPS 

Call.

(h) Contingency Payment Arrangements

Agent Members and Sponsored Members that have elected to provide 

Back-up Agent Services and where applicable, the Back-up Paying 

Agent Services are required to have contingency payment 

arrangements in place to ensure that they can continue to meet the 

margin obligations of their Sponsored Members or their own margin 

obligations (as applicable) in the event of failure of their nominated 

PPS bank(s). Furthermore, Sponsored Member’s are required to have 

contingency payment arrangements in place to ensure that it continues 

to meet its’ margin obligations where its’ corresponding Agent 

Member fails to meet the Payment Services obligations in SC 

Regulation 6. During the application process, the Clearing House will

require the applicant for Agent Members or Sponsored Members status 

to provide evidence of these arrangements and will test these prior to 

the applicant becoming an Agent Member or Sponsored Member (as 

applicable). Such Agent Member or relevant Sponsored Member (as 

applicable) will be required to provide evidence of their contingency 

payment arrangements on an annual basis at the Clearing House’s 

request.

(i) Recovery from Insolvent PPS Banks

In the event that payment is not completed by the relevant PPS bank, 

due to insolvency rather than technical failure, and the affected Agent 

Member(s) and relevant Sponsored Member(s) make alternative 

payments, the Clearing House, should it make a recovery from the 

estate of the PPS bank, will credit such recovery, net of cost, to the 

accounts of the affected Agent Members or relevant Sponsored

Members in proportion to the amount of the original missed payment.

3.4 Acceptable Forms Of Collateral

The Clearing House accepts certain types of Collateral as determined by the Clearing 

House from time to time. Please refer to the Clearing House’s website following link 

for further details.:
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http://www.lch.com/risk-collateral-management/collateral-management/acceptablecollateral

The Clearing House may vary, at its discretion, the standard requirements and 

valuation procedures set out in this Section 3.4, either generally or in a 

particular case, without giving prior written notice to Sponsored Members or 

Agent Members. Further, the Clearing House may vary the types of collateral 

acceptable to it.

3.4.1 Cash

In order not to fall within the scope of deposit-taking regulations applying to 

banks and similar institutions, the Clearing House can accept cash from: (i)

Agent Members for their own account; (ii) Agent Members for the account of 

their Sponsored Members; and (iii) from Sponsored Members and in all cases

only in relation to current or anticipated obligations.

Cash used as Collateral need not be provided in the same currency as that of 

the liability of the related Sponsored Member. In such cases, currencies will be 

notionally converted with reference to quoted exchange rates determined at 

approximately 16:45 London time the previous business day.

Agent Members or Sponsored Members (where applicable) must give the 

Clearing House no less than two business days' notice of their intention to 

substitute existing cash Collateral with non-cash Collateral or cash Collateral 

in a different currency where the amount of cash is GBP 50 million or greater, 

whether for their own account or for the account of its Sponsored Members. 

Where an Agent Member or Sponsored Member (where applicable) fails to 

give such notice, the Clearing House may decline to transfer or release the

cash Collateral until the end of the required notice period.

3.4.2 Securities

Please refer to the Clearing House’s following pages on our website for

prevailing haircuts and the types of notes on cCollateral acceptable to the 

Clearing House as Collateral.:

http://www.lch.com/risk_management/ltd/acceptable_collateral.asp 

3.4.3 Value Notification

Agent Members and Sponsored Members may obtain details on the value 

ascribed to non-cash Collateral on their account via:

(a) the relevant reports available on the Clearing House website portal;

(b) the CMS; and/or

(c) SWIFT message sent from the Clearing House to the relevant Agent 

Member / Sponsored Member.
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Please refer to the Clearing House’s following pages on our website for 

haircuts on Collateral.:

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-acceptable-collateral/ltd-acceptable

3.4.4 Use of Credits as Collateral

RepoClear credit variation margin may be used to offset RepoClear debit 

variation margin and initial margin across currencies. Amounts are not paid in

cash, but may be offset against certain specific margin obligations of the 

relevant Sponsored Member, with the result that the related Agent Member or 

the Sponsored Member which is itself providing Back-up Agent Services and 

where applicable, Back-up Paying Agent Services, will need to provide less 

Collateral in respect of those margin obligations.

3.5 Distribution of Collateral

The following SC Procedures are not in any way intended to restrict, 

vary, or alter the Clearing House's rights to apply any Collateral held by 

it to meet the relevant Sponsored Member's or Agent Member's 

liabilities/obligations to the Clearing House.

3.5.1 Collateral Application

The Clearing House will apply Collateral to each liability (in turn) in relation 

to the collateral utilisation fees charged in respect of each collateral group 

categorisation by the Clearing House, as published from time to time on the 

Clearing House’s website. at the following link:

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-fees-collateral

The Clearing House will apply the least expensive collateral group first and 

thereafter, will apply each collateral group in ascending order of fees.

If the amount charged is the same for more than one collateral group, they will 

be applied in alphabetical order by collateral group.

The Clearing House will not (i) require the assets of a sub-fund of an umbrella 

fund to be applied towards the liabilities of another sub-fund or (ii) otherwise 

prejudice the application of any Irish rule of law concerning segregated 

liability between sub-funds of umbrella funds. Notwithstanding any provision 

of the Default Rules:

(a) if the Clearing House succeeds by any means whatsoever or wheresoever 

in having recourse to any assets of any sub-fund in the discharge in all or 

any part of a liability which was not incurred on behalf of that sub-fund, 
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the Clearing House shall be liable to the umbrella fund to a sum equal to 

the value of the benefit thereby obtained by the Clearing House; and

if the Clearing House succeeds in seizing or attaching by any means, or 

otherwise levying execution against, any assets of a sub-fund in respect of a 

liability which was not incurred on behalf of that sub-fund, the Clearing House 

shall hold those assets or the direct or indirect proceeds of the sale of such 

assets on trust for the umbrella fund and shall keep those assets or proceeds 

separately and identifiable as such property. 

3.5.2 Cash Currency Preference

Agent Members (and Sponsored Members, where a Sponsored Member is 

providing Back-up Agent Services and where applicable, Back-up Paying 

Agent Services) may nominate the sequence of cash Collateral distribution. 

In the absence of a nominated sequence of currency preferences, a Sponsored

Member’s liabilities will be covered by cash in the same currency as the 

liability. This means that a GBP liability will be covered in GBP cash, a EUR 

liability will be covered in EUR cash and so forth. Any further liabilities in the 

relevant currency will be covered by cash called via PPS. 

Agent Members and Sponsored Members (where a Sponsored Member is 

providing Back-up Agent Services and where applicable, Back-up Paying 

Agent Services) may define their own sequence of cash Collateral utilisation 

for each mnemonic and each account type (i.e. House or Buffer). The 

sequence does not have to be on a like for like basis and a Agent Members and 

Sponsored Members (where a Sponsored Member is providing Back-up Agent 

Services and where applicable, Back-up Paying Agent Services) may choose 

any eligible currency to cover its liability (for example, a GBP liability can be 

covered in EUR cash). 

Any changes to an Agent Member's or a Sponsored Member's nominated 

currency sequence, or a request relating to excess cash currency balances in a 

particular currency, should be notified to the Clearing House by providing a 

minimum of two business days’ notice.

3.5.3 Record of Collateral Provided

Charges and interest shall be calculated in accordance with the information 

published on the website of the Clearing House.

3.5.4 Use of Collateral - Default or Agent Close-out Event

The order of priority (in which cash and non-cash Collateral are applied to 

cover Sponsored Members' liabilities or Agent Members' liabilities, as 

applicable), set out elsewhere in this Section 3.5, does not necessarily reflect 

the order of priority of realisation or application of Collateral which the 

Clearing House may follow in the case of a Default or an Agent Close-out 

Event. Following a Default or Agent Close-out Event, the Clearing House is 
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3.6 Interest on Cash Balances and Accommodation Charges

3.6.1 Interest Rates

The Clearing House applies interest to Sponsored Member's and Agent 

Members' cleared cash balances as published on the Clearing House’s website. 

3.6.2 Payment of Interest and Charges

Interest and accommodation charges are charged monthly, from the last

calendar day of the previous month to the penultimate day of the current 

month. Interest and accommodation charges are calculated on a daily basis and 

the resultant monthly total is posted to the relevant collateral account(s) of the 

Sponsored Member or Agent Member (as applicable), for value on the third

business day following the penultimate day of the month. A VAT invoice is 

also issued on the third business day of each month detailing the interest and 

accommodation charges applicable for the previous month. Separate invoices 

are issued for each currency which can be found on the Sponsored Member 

reporting website.

VAT is charged, 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.

The invoice provides detail in respect of:

(a) interest due to be credited or debited; and

(b) accommodation charges.

VAT on accommodation charges is subject to the standard rate, some markets 

may be excluded.

3.6.3 Cash Balance Interest Rate

The Clearing House applies interest to a Clearing Member’s cleared cash 

balances. The following rates are applied:

(i) RDR – RepoClear Deposit Rate – Tthe rate at which the Clearing 

House may pay or charge interest on credit cash balances made in EUR, 

GBP and USD. The current spread rates are published on the Clearing 

House’s website at the following link: ;

(ii)
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(i) ; and

(iii)(ii) LDR – London Deposit Rate – Tthe rate at which the Clearing House 

will pay or charge interest on credit cash balances for all other 

currencies. The current spread rates are published on the Clearing 

House’s website. at the following link:

http://www.lch.com/fees/ltd/custody_services.asp

Where the Clearing House provides Agent Members and Sponsored Members 

with at least three days’ written notice (which may be by way of Clearing 

Member circular), the Clearing House may increase or decrease the RDR. In 

the event of extreme market conditions, the Clearing House may freely and 

without notice increase or decrease the RDR for up to five consecutive 

business days.

Where the Clearing House provides Agent Members and Sponsored Members 

with at least three days’ written notice (which may be way of Clearing 

Member circular), the Clearing House may increase or decrease the LDR by 

up to 10bps. The foregoing shall not apply in the event of extreme market 

conditions, during which the Clearing House may freely and without notice 

increase or decrease the LDR for up to five consecutive business days.

3.7 Fees

Details of fees and refunds pending are collated during the month.

An invoice or credit note is produced detailing the fees to be posted to collateral 

accounts.

The invoice/credit note displays the type of fee, contract, future or option type, 

currency, fee rate, volume, fee amount, VAT amount, sub totals for each fee class and 

the overall total posted to a collateral account.

Monthly postings are processed via the relevant collateral account at the beginning of 

the following month, on the third working day for the relevant currency. 

3.8 Default Fund Contributions

Provisions relating to RepoClear Contributions are set out in Section 2 of these SC 

Procedures.

3.9 Clearing House Reporting 

The Clearing House (acting, where applicable, through the entity to which it has 

elected to delegate the relevant reporting obligation) shall report to a trade repository 

or similar body the details of a Contract and any modification or termination of such a

Contract without duplication and no later than the working day following the 
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4. COLLATERAL

4.1 General Information

The Clearing House is, at its sole discretion, entitled to determine what will be 

acceptable to it as Collateral and to determine when collateral will cease to be acceptable 

as Collateral.

If any cash instrument or security, lodged in accordance with any of the following SC 

Procedures, is in any way found to be unacceptable, it will immediately be given a 

zero value for the purposes of calculating the value of: (i) the SM/AM Current 

Collateral Balance (the "SM/AM Current Collateral Value"); (ii) the Agent Buffer

Collateral Balance (the "Agent Buffer Current Collateral Value"); (iii) the ARC 

Account; and (iv) the SM/AM Default Fund Account. Replacement Collateral may be 

required immediately from the Sponsored Member’s corresponding Agent Member or 

from the Sponsored Member itself where such Sponsored Member is performing 

Back-up Agent Services and where applicable, Back-up Paying Agent Services.

4.1.1 Instructions

The Clearing House accepts instructions to lodge, release and transfer cash, 

securities and triparty Collateral via its online CMS and/or any other 

operational process the Clearing House determines.

If there is an outage of the CMS (or if the Clearing House decides it is 

appropriate), an Agent Member or Sponsored Member may send certain 

instructions using the appropriate form by email to:

collateral.clientservices@lch.com

collateral.clientservices@lseg.com.

C Collateral Operations can be contacted on +44 20 7426 7505 +44 (0)20 

7426 7593.

A copy of the appropriate form is available hereon the Clearing House’s 

website.:

The Clearing House may act upon instructions or communications appearing 

to have been issued by or on behalf of, or to have come from, an Agent 

Member or a Sponsored Member (where such Sponsored Member is 

instructing a security transfer or is performing Back up Agent Services and 

where applicable, Back up Paying Agent Services). These will be accepted by 

the Clearing House as genuine, even if, for example, they are later found:

(a) to be inaccurate, whether in whole or in part; or
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(b) not to have been given by the Agent Member or the Sponsored

Member (where applicable), or with the authority of such Agent 

Member or Sponsored Member (as applicable).

The Clearing House will only accept delivery of non-cash Collateral from an 

Agent Member or Sponsored Member (as applicable) in accordance with these 

SC Procedures, and will not sell or purchase cash or non-cash Collateral for 

Agent Members or Sponsored Members, except in so far as it is acting under 

its SC Default Rules and related SC Regulations.

The Clearing House reserves the right to require a Sponsored Member or 

Agent Member (as applicable) to execute revised versions of the Deed of 

Charge or the Title Transfer Contract (as applicable) whenever the Clearing 

House, at its sole discretion, considers that it would be appropriate to do so.

The Clearing House reserves the right to change the information required on 

instructions received via the CMS or via the relevant form, whenever the 

Clearing House, at its sole discretion, considers that it would be appropriate to 

do so.

4.1.2 Excess Collateral

The Clearing House shall, at least once on each business day, notify each 

Sponsored Member and its corresponding Agent Member(s) of the Required 

Margin Amount and the Total Required Margin Amount in respect of such 

Sponsored Member. The Required Margin Amount and the Total Required 

Margin Amount are calculated in respect of each Sponsored Member/Agent 

Member relationship, as identified by their unique mnemonic (a "SM/AM 

Netting Set").

The Clearing House shall, at least once on each business day, notify each 

Agent Member of additional resources required in respect of such Agent 

Member’s Agent Buffer Account.

The Clearing House shall, at least once per calendar month, notify each Agent 

Member of additional resources required in respect of such Agent Member’s 

ARC Account and/or SM/AM Default Fund Account.

If the SM/AM Current Collateral Value exceeds the sum of that Sponsored

Member's Total Required Margin Amount (deducting amounts of any such 

margin requirements from the Sponsored Member to the Clearing House in 

respect of which time for performance has not yet occurred) and any other 

amounts which the Sponsored Member is required to transfer to the Clearing 

House under applicable law or regulation with respect to the relevant SM/AM 

Netting Set (such excess being referred to in this Section 4.1.2 as the "excess 

collateral value"), then that Sponsored Member or Sponsored Member's 

corresponding Agent Member may, in accordance with Sections 4.3 and 4.4 of 

the SC Procedures and/or any other operational process the Clearing House 

determines, request that some or all of the Collateral comprising the SM/AM 

Current Collateral Balance having a value not exceeding the excess collateral 

value (such Collateral being referred to in these SC Procedures as "excess 
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(iii) if in respect of Coupons applied to an Agent Buffer Account, the Agent 

Member is not an Affected Member;

(iv) to the extent the Clearing House is permitted to take such steps and 

make such transfer under applicable law and the contractual provisions 

of any relevant Depository; and

(v) if there is no overnight margin and/or cash call in respect of the 

relevant Agent Member or Sponsored Member which remains 

outstanding.

4.1.8 Record Date

The Clearing House may restrict the lodgement, release and/or transfer of noncash Collateral on a record date for the payment of a Coupon applicable to 

such non-cash Collateral where the Clearing House considers this necessary in 

order to correctly pay such Coupon to the relevant Sponsored Member or 

Agent Member (as applicable) on the Coupon payment date.

4.1.9 Charges

The Clearing House will collect any charges incurred as deemed necessary 

using PPS and charging the Sponsored Member's PPS account or, as 

applicable, a PPS account of its corresponding Agent Member. Examples of 

such charges may include a collateral agent's overnight custody charge, 

transfer charges or any charges relating to the movement of non-cash 

Collateral. For a list of the Clearing House's custody services fees, please refer 

to the Clearing House’s website.: 

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-fees-collateral

4.2 Documentation

4.2.1 Deed of Charge or Title Transfer Contract

Sponsored Members wishing to, or to permit their Agent Members to, transfer 

non-cash Collateral to the Clearing House on such Sponsored Member’s 

behalf must complete and maintain either a Deed of Charge or Title Transfer 

Contract. 

The Deed of Charge establishes a fixed charge over the Sponsored Member's 

interests pursuant to the custody relationship which arises upon specified noncash Collateral being transferred into the SM/AM Account with the Clearing 

House by the Sponsored Member or Agent Member (as applicable). 

Under the Title Transfer Contract, the Sponsored Member transfers to the 

Clearing House full right, title and interest in non-cash Collateral to the 

Clearing House on terms that, when the Sponsored Member discharges the 

Covered Obligations (as defined in the Title Transfer Deed) to the Clearing 
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Collateral transferred to the Clearing House in respect of an ARC Account will 

not be applied by the Clearing House to the Agent Member’s liabilities on a 

SM/AM Account, Agent Buffer Account or SM/AM Default Fund Account 

(see Section 2.5) or on another Agent Buffer Account, except as pursuant to 

the SC Default Rules.

Collateral transferred to the Clearing House in respect of an SM/AM Default 

Fund Account will not be applied by the Clearing House to the Agent 

Member’s liabilities on a SM/AM Account, Agent Buffer Account or ARC 

Account (see Section 2.5) or on another SM/AM Default Fund Account, 

except as pursuant the SC Default Rules.

Collateral transferred to the Clearing House in respect of an account may be 

applied by the Clearing House towards the payment of any sum whatsoever 

due by the Sponsored Member and/or Agent Member (as applicable) to the 

Clearing House, with respect to Contracts registered against such accounts.

4.3 Instructions via CMS

The Clearing House will action instructions relating to Collateral that have been input 

and authorised via the CMS in accordance with, and subject to, this Section 4 of the SC 

Procedures. 

For non-cash instructions, the details input on the CMS will form the basis of the 

matching instruction sent to the relevant Depository. Agent Members and, where 

applicable, Sponsored Members must ensure that the details are input correctly in order 

to avoid unmatched transactions.

It is the responsibility of the Agent Member or, as applicable, the Sponsored Member 

(where such Sponsored Member is instructing a security transfer or is performing 

Back up Agent Services and where applicable, Back up Paying Agent Services) to 

input a cancellation request of any incorrectly input instruction and to subsequently 

input the correct details in a new instruction. Please note that it may not be possible to 

cancel an instruction, (please refer to Section 4.4.7 below for further details).

The Clearing House will update the status of an instruction in the CMS to reflect the 

status of the corresponding instruction at the relevant Depository or PPS bank. On 

settlement of the relevant transaction, the Clearing House will reflect the balance of 

the securities or cash on the relevant account of the Sponsored Member, or Agent 

Member as applicable, and take them into account for the purposes of calculating the 

SM/AM Current Collateral Value or Agent Buffer Current Collateral Value.

The relevant account details that an Agent Member or Sponsored Member should use 

for matching transactions at a Depository are available from the Clearing House on 

request. located at: https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-collateral-management-system

The Clearing House will not be liable for any losses to Sponsored Members or Agent 

Members or third parties caused by non-settlement or by a delay in settlement as a 

result of the actions or omissions of a Depository or, as applicable, the Agent Member
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or the Sponsored Member (save for any liability which may not be excluded by 

applicable law).

4.4 Settlement Procedures – Securities provided on a bilateral basis

All transactions to transfer non-cash Collateral to or from the Clearing House will be 

executed free of payment. Members are encouraged to instruct with provisions to allow 

settlement in late day windows (e.g. Daylight, Priority 90 and other such local market 

indicators).

4.4.1 Instruction Deadlines

Agent Members and where applicable Sponsored Members may input security 

instructions via the CMS at any time. Instructions will only be actioned by the 

Clearing House during operational hours.

The Collateral Operations Team’s operational hours are: Monday – to Friday 

07:00 – 21:00 (UK time).

Instruction deadlines are available on the LCH Clearing House’s website. at the following 

location:

https: //www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-acceptable-collateral/ltd-acceptable

4.4.2 Deliveries to and from Local Markets

The Clearing House is bound by the settlement deadlines of the relevant 

Depository. Agent Members and relevant Sponsored Members should refer to 

the relevant Depository for these deadlines. Note that for transactions from 

local markets the settlement deadline may be earlier than the Clearing House 

hours of operation and should therefore be instructed the day before the 

settlement date (i.e. on S-1). Instructions to the Clearing House must be 

provided at least one hour before the market deadline for same day settlement.

For example:

Deliveries from Local Market

Depository

Deadline

Instruction Deadline 

to Clearing House

(UK time)

Japan 07.55 17.00 on S-1

Belgium 14.50 13.50 on S

Italy 15.00 14.00 on S

4.4.3 Transfer of Securities Collateral to the Clearing House

Instructions for the transfer of securities Collateral to the Clearing House that 

are input via the CMS or, when directed by the Clearing House, via one of the 

forms available on the website by: (i) the Agent Member for their own account 

or for the account of its corresponding Sponsored Member; or (ii) Sponsored 
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(c) a supranational organisation recognised by Italian law.

Beneficial owners are required to supply duly completed and executed official 

forms as proof of eligibility to the exemption and where applicable supply 

additional documentation, before a delivery can be made into this account.

Official forms are available on request from the Collateral Operations Team.

Original forms are to be received by the Clearing House before Italian 

securities can be accepted within the gross account 91737.

The effective date depends on the type and terms of the security:

• Coupon debt securities (BTPs, CCTs and CTOs)

The new regime applies to the Coupons that arise on these securities on 

or after 1 January 1997, regardless of the issue date.

• Zero coupon debt securities with a maturity of less than one year 

(BOTs)

The regime applies to all securities issued on or after 1 January 1997.

Sponsored Members and Agent Members should consult their own tax 

advisers before lodging Collateral to the Clearing House or submitting 

any tax documentation.

4.5.3 Withholding tax – Depositories

A Depository may offer a recovery service for overseas taxes on government 

bonds. The Clearing House will assist in the recovery process and remit to the 

relevant Sponsored Members or Agent Members, as applicable, any relevant 

recovery in withholding tax credited to the Clearing House's account by the 

relevant Depository.

In certain cases the CSDs/Custodian and Clearing House will withhold tax on 

a coupon if the correct documentation is not lodged with the CSDs/Custodian 

and the Clearing House at the time when a coupon is due.

4.6 References

These SC Procedures should be read in conjunction with the relevant contractual 

provisions, user guides and/or manuals of the relevant Depository. Please also refer to 

each relevant Depository for the relevant settlement deadlines, in particular those for 

deliveries from local markets to Clearing House accounts.

4.7 Contingency Arrangements

In the event of an outage of the CMS, the Clearing House will notify Agent Members 

and Sponsored Members via the Clearing Member circular and Agent Members and 

Sponsored Members may send certain instructions, using the appropriate form to the 

Clearing House by email (see Section 4.1.1).
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The new forms are available here: 

LCH Ltd Acceptable Securities | LCH Group

https://www.lch.com/risk-collateral-management/ltd-collateral-management/ltdcollateral-management-system

Normal service hours will apply to such instructions. However, deadlines for manual 

instructions are earlier. Please refer to the following page of the LCH website for 

details:

LCH Ltd Acceptable Securities | LCH Group

https: //www.lch.com/risk-collateral-management/ltd-collateral-management/ltdacceptable-collateral/ltd-acceptable

The Clearing House will notify Agent Members and Sponsored Members via the 

Clearing Member circular when the CMS is available again.

4.8 Triparty Service of Euroclear and Clearstream

4.8.1 General Information

In order for a Sponsored Member or Agent Member to transfer securities to the 

Clearing House using a triparty arrangement, such Sponsored Member or 

Agent Member, the relevant triparty agent and the Clearing House, must have 

completed and signed the relevant documentation. Please contact Collateral

Operations on +44 (0)207 426 7237 for more information.

Sponsored Members and Agent Members may execute a triparty transaction to 

cover initial margin requirements at the Clearing House. Triparty instructions 

must be provided to the Clearing House via the CMS by the Agent Member or 

the Sponsored Member. Instructions may be input for future settlement dates.

If the Agent Member or Sponsored Member is unable to make triparty

instructions via the CMS, it will be possible to instruct using the relevant 

triparty contingency forms found at the following page of the LCH website:

LCH Ltd Acceptable Securities | LCH Group

https://www.lch.com/risk-collateral-management/ltd-collateralmanagement/ltd-collateral-management-system

Triparty transactions must be a minimum of one million GBP, EUR or USD. 

Settlement deadlines can be found on the LCH website at the following 

location:

LCH Ltd Acceptable Securities | LCH Group

https://www.lch. com/risk-collateral-management/ltd-collateralmanagement/ltd-collateral-management-system