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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

3 May 2023

Mr. Christopher Kirkpatrick

Commodity Futures Trading Commission

1155 21st Street NW

Three Lafayette Centre

Washington, DC 20581

LCH Limited Self-Certification: ForexClear default fund contribution in EUR

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 implement a new ForexClear initiative permitting 

Clearing Members to contribute to the default fund (DF) in EUR cash.

Part I: Explanation and Analysis

ForexClear Clearing Members are currently permitted to contribute to the ForexClear DF in USD 

cash only. This initiative will allow Clearing Members to choose contributing to the DF in EUR cash, 

as an alternative to USD cash only. The change gives flexibility to some Clearing Members, mainly 

European, who may find contributing in EUR cash more convenient.

This initiative will have no impact on the ForexClear stress test loss, DF sizing methodology and 

DF management process. The currency chosen by a Clearing Member to contribute to the DF will 

need to be aligned to that used to contribute to the Trade Registration Fund (TRF1). Both the DF 

and the TRF (the funds) will continue to be sized in USD and ForexClear Clearing Members which 

choose to ‘opt in’ to pay in EUR will pay their contributions to both funds in EUR equivalent sums. 

Clearing Members that decide to switch the currency (from USD to EUR and vice versa) will not be 

able to switch again for six months, to ensure the requests can be reflected in the operational 

processes in a safe manner. 

ForexClear will implement certain mitigating measures, supported by daily monitoring, to account 

for the exchange risk arising from sizing the funds in USD and receiving contributions in EUR. 

1The ForexClear TRF is a mutualised fund designed to increase the certainly of intraday trade registration in the service. Contributions 

are optional. Clearing members using more than 75% of their applicable tolerance are required to replenish the amount at the 

following margin call. The MER is a buffer amount required to register new trades whilst limiting intraday margin calls. Clearing 

member opting into the TRF are no longer subject to MER buffer requirement. 
These will include an appropriate haircut and the right for LCH to require additional funds, where 

deemed necessary.

The project is expected to go live on or after 22 May 2023 and the Rulebook will be updated 

accordingly at that time.

Part II: Description of Rule Changes

The Rulebook changes that accompany this initiative are set out below and are enclosed in blackline form in the Appendices. 

The General Regulations clarify that the minimum ForexClear contribution can be made in both 

USD and EUR (see Definitions section on p5).

The Procedures Section 2I for non-FCM Clearing Members, under Default Management section 

1.10.4 on p45, and in the FCM Procedures for FCM Clearing Members, under Financial 

Transactions section 3.9 on p227, explain that ForexClear contributions will be calculated in USD, 

but they can be paid in EUR equivalent sum, including any buffer that ForexClear may determine 

and call to account for the market risk of currency exchange. ForexClear Clearing Members cannot 

change the chosen currency for six months. 

The Default Procedures, under Schedule 5 ForexClear Default Fund Supplement section 5F on 

p104, explain that the ForexClear contribution can also be made in EUR equivalent, and that, 

whenever necessary, additional ForexClear contributions to cover market risk can be requested. 

Lastly, ForexClear Unfunded Contributions can also be paid in USD or EUR equivalent (see 

Schedule 5 ForexClear Default Fund Supplement section F8 on p 105). 

The text of the changes is attached hereto as:

Appendix I: General Regulations

Appendix II: Procedure Section 2I [ForexClear Clearing Service]

Appendix III: FCM Procedures 

Appendix IV: Default Procedures

Part III: Core Principles Compliance

LCH has 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 rule changes have relevance to Core Principle B (§39.11) (Financial Resources) and Core 

Principle G (§39.16) (Default Rules and Procedures) under the CFTC regulations.

Changes described in this filing will not impact the LCH’s ability to meet the objectives of Core 

Principle B (§39.11) on Financial Resources, as ForexClear will continue to maintain an appropriate 

amount of financial resources to manage its exposures to Clearing Members.

In respect of Core Principle G (§39.16) on Default Rules and Procedures, changes described in 

this submission do not impact the LCH’s approach to default management for the ForexClear 

service, including its overall rules and procedures which continue to be designed to allow for the 

efficient, fair and safe management of events during which Clearing Members may become 

insolvent or default on obligations to LCH. 
LCH engages its Clearing Members in the design and testing of new products and services at an 

early stage through working groups, and that was also the case with the ForexClear DF contribution 

in EUR. The changes to the Rulebook were also a subject to a consultation with Clearing Members.

No comments were received. 

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.

Should you have any questions please contact me at aleksandra.wojcik@lseg.com. 

Yours sincerely,

Aleksandra Wojcik

Compliance Officer, LCH Limited
Appendix I: General Regulations
Clearing House: General Regulations

- iApril 2021

GENERAL REGULATIONS OF

LCH LIMITED
Clearing House: General Regulations

- 50-

April 2021

"Member" or "Clearing 

Member"

(a) subject to (b) means an undertaking (including a firm 

or company) which is entitled to be party to Contracts 

with the Clearing House in accordance with a 

Clearing Membership Agreement and the Procedures 

or a Co-operating Clearing House, where so agreed 

with the Co-operating Clearing House (as 

applicable). For the avoidance of doubt, the terms 

"Member" and "Clearing Member" for the 

purposes of these Regulations, Default Rules and 

Procedures, do not a mean shareholder of LCH

Limited or of any member of LCH Group

(b) "Clearing Member" includes or means (as the case 

may be) FCM Clearing Member for the purpose of 

the Default Rules (including the Rates Service DMP 

Annex and the ForexClear DMP Annex), the FCM 

Default Fund Agreement and any other document, 

rule or procedure as specified by the Clearing House 

from time to time

"Member Compression Cycle" means a Multilateral Compression Cycle requested by two 

or more SwapClear Clearing Members and agreed to by the 

Clearing House in relation to eligible SwapClear Contracts 

held by those requesting SwapClear Clearing Members. For 

the avoidance of doubt, a Member Compression Cycle will 

not involve any ACSP

“MER Buffer” has the meaning assigned to it in the Procedures

"Minimum ForexClear 

Contribution"

means USD 5,000,000 (or Euro equivalent, such sum to be 

determined by the Clearing House in its sole discretion)

"Minimum Non-Tolerance 

SwapClear Contribution"

means £10,000,000 (which, for the avoidance of doubt, 

excludes the £3,000,000 minimum amount payable by an 

SCM in respect of the SwapClear Tolerance Contribution 

Amount);

"Minimum RepoClear 

Contribution"

means GBP 2,000,000 at Clearing Member level

"Minimum RepoClear 

Contribution Member"

means an RCM in respect of which the Preliminary 

RepoClear Contribution calculated under Rule R2 of the 

RepoClear Default Fund Supplement, is equal to or less than 

the Minimum RepoClear Contribution for the time being

"Minimum SwapClear 

Contribution Member"

means an SCM in respect of which the SwapClear NonTolerance Contribution Amount calculated under paragraph 

(f) of Rule S1 of Part A of the Rates Service Default Fund 

Supplement is equal to or less than the Minimum NonTolerance SwapClear Contribution for the time being
Appendix II: Procedure Section 2I 

ForexClear Clearing Service
`

LCH LIMITED

PROCEDURES SECTION 2I

FOREXCLEAR CLEARING SERVICE
Clearing House Procedures ForexClear Service 

LCH Limited © 2021 - 45 - April 2021

Where the Clearing House receives more than one bid from the same 

ForexClear Clearing Member and in respect of the same Auction the Clearing 

House is entitled to accept the last bid received by it in respect of that Auction. 

Where the Clearing House does not receive a bid that was made by a ForexClear 

Clearing Member for operational, technological or other similar reasons and as 

a result of which a bid does not reach the Clearing House, the Clearing House 

will be unable to accept a bid and shall not be liable for any failure to accept 

such bid.

1.10.3 Affiliate Bidding: ForexClear Clearing Members are entitled to bid for an 

Auction Portfolio on behalf of an affiliated ForexClear Clearing Member. 

Where a ForexClear Clearing Member makes a bid and that ForexClear 

Clearing Member has an affiliated ForexClear Clearing Member that does not 

make a bid, the Clearing House shall not (unless instructed otherwise in 

accordance with the paragraph below) assume that the bidding ForexClear 

Clearing Member has made the relevant bid on behalf of a non-bidding, 

affiliated ForexClear Clearing Member.

A ForexClear Clearing Member may notify the Clearing House, in advance of 

an Auction, that it wishes to bid on behalf of an affiliated ForexClear Clearing 

Member. Where it wishes to do so, the ForexClear Clearing Member should 

contact the Clearing House's Client Services Team (membership@lch.com; +44 

(0)207 426 7949).

1.10.4 ForexClear Contributions: ForexClear Contributions will be called via PPS on 

the fourth business day of each month or otherwise pursuant to a determination 

of a ForexClear Contribution under the Default Rules.

ForexClear Contributions shall be calculated in USD. The Clearing House may

permit a ForexClear Clearing Member to pay its ForexClear Contribution in a 

Euro equivalent sum, such sum shall be determined by the Clearing House in 

its sole discretion. In the event a ForexClear Clearing Member wishes to pay its 

ForexClear Contribution in a Euro equivalent sum, it must provide notice to the 

Clearing House (the form and manner of such notice shall be prescribed by the 

Clearing House from time to time).

The Clearing House may, in its sole discretion, apply a buffer to ForexClear 

Contributions paid in Euro to cover market risk. It shall be a precondition to the

payment of ForexClear Contributions in Euro that the relevant ForexClear 

Clearing Member opt in to (and remain opted-in) ForexClear Tolerance in Euro.

ForexClear Clearing Members must pay their respective ForexClear 

Contributions in the same currency for a minimum of six consecutive months 

prior to being eligible to pay their ForexClear Contribution in a different 

currency. 

Excess ForexClear Contribution amounts due to ForexClear Clearing Members 

following a ForexClear Determination Date will (subject to the Default Rules) 

be repaid to ForexClear Clearing Members' PPS accounts on the fourth business 

day immediately following such ForexClear Determination Date.
Appendix III: FCM Procedures
FCM PROCEDURES OF THE CLEARING HOUSE

LCH LIMITED
FCM Procedures Financial Transactions

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March 2021

Uncovered Stress Loss (as defined in Rule S1(f)) of an FCM Clearing Member shall be 

determined by reference to the FCM SwapClear Contracts entered into (1) on behalf 

the relevant FCM Clearing and (2) with respect to the FCM Clients of such FCM 

Clearing Member.

3.9 ForexClear Contributions

ForexClear Contributions will be called via PPS on the fourth Business Day of each 

month or otherwise pursuant to a determination of a ForexClear Contribution under the 

Default Rules

ForexClear Contributions shall be calculated in USD. The Clearing House may permit 

an FCM ForexClear Clearing Member to pay its ForexClear Contribution in a Euro 

equivalent sum, such sum shall be determined by the Clearing House in its sole 

discretion. In the event an FCM ForexClear Clearing Member wishes to pay its 

ForexClear Contribution in a Euro equivalent sum, it must provide notice to the 

Clearing House (the form and manner of such notice shall be prescribed by the Clearing 

House from time to time).

The Clearing House may, in its sole discretion, apply a buffer to ForexClear 

Contributions paid in Euro to cover market risk. It shall be a precondition to the 

payment of ForexClear Contributions in Euro that the relevant FCM ForexClear 

Clearing Member opt in to (and remain opted-in) ForexClear Tolerance in Euro.

FCM ForexClear Clearing Members must pay their respective ForexClear 

Contributions in the same currency for a minimum of six consecutive months prior to 

being eligible to pay their ForexClear Contribution in a different currency.

Excess ForexClear Contribution amounts due to FCM ForexClear Clearing Members 

following a ForexClear Determination Date will (subject to the Default Rules) be repaid 

to FCM ForexClear Clearing Members' PPS accounts on the fourth Business Day 

immediately following such ForexClear Determination Date.

Interest on ForexClear Contributions will be paid to FCM ForexClear Clearing 

Members' PPS accounts on the fifth Business Day of each month, in respect of the 

relevant “interest accrual period” occurring immediately prior to each such Business 

Day. Interest is calculated in respect of each “interest accrual period”, which 

commences on (and includes) the fourth Business Day of each month (each, a 

“ForexClear Reset Day”) and ends on (and includes) the calendar day immediately 

before the next ForexClear Reset Day. Notwithstanding anything else herein, if the rate 

of interest payable on ForexClear Contributions is negative, interest shall be payable by 

FCM ForexClear Clearing Members to the Clearing House.

3.10 Quantifying ForexClear Contributions

For the purposes of calculating the ForexClear Margin Weight under Rule F2(d) of the 

ForexClear Default Fund Supplement, the uncovered stress loss of an FXCCM shall be 

determined by reference to the ForexClear Contracts entered into (1) on behalf of the 

relevant FXCCM and (2) with respect to Clearing Clients and FCM Clients of such 

FXCCM.
Appendix IV: Default Procedures
CORPORATE

LCH LIMITED

DEFAULT RULES
 

Default Rules

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AprilFebruary 2022

SCHEDULE 5

FOREXCLEAR DEFAULT FUND SUPPLEMENT

F1. In accordance with and subject to Rule F2, the amount of each ForexClear Clearing 

Member's ForexClear Contributions shall be determined by the Clearing House as soon 

as practicable after each ForexClear Determination Date as appropriate on the basis of 

information available as at close of business on such ForexClear Determination Date 

and notified to such FXCCM as soon as practicable after such determination in 

accordance with the Procedures.

F2. Each FXCCM's ForexClear Contribution (other than any ForexClear Unfunded 

Contribution or any Supplementary Contribution) shall be determined by the Clearing 

House in accordance with the following provisions:

(a) determinations will be made by the Clearing House on the date that an FXCCM 

joins the ForexClear Service, and at the close of business on the first business 

day of each month, and otherwise in accordance with paragraph (f) below (each,

a "ForexClear Determination Date"), provided that following a Default, any 

such determinations and any such ForexClear Determination Date which might 

otherwise have occurred under this Rule F2 shall be suspended for the duration 

of the period (the "ForexClear Default Period") commencing on the date of 

such Default and terminating on the last to occur of the following dates:

(i) the date which is the close of business on the day falling 30 calendar 

days after the ForexClear Default Management Process Completion 

Date in relation to such Default (or, if such day is not a business day, the 

next succeeding business day); and

(ii) where, prior to the end of the period referred to in (i) above (or such 

period as has already been extended pursuant to this paragraph (ii)), one 

or more subsequent Defaults (each, a "Relevant Default") occur, the 

date which is the close of business on the day falling 30 calendar days 

after the ForexClear Default Management Process Completion Date in 

relation to a Relevant Default which falls latest in time (or, if such day 

is not a business day, the next succeeding business day);

(b) On each business day, the Clearing House will determine one or more

"Combined Loss Values", and a "Largest Combined Loss Value", in respect 

of each of the 30 preceding business days, where:

(i) "Combined Loss Value" means, in respect of a business day and a 

scenario, the sum of the largest and second largest stress-testing loss 

determined by the Clearing House in respect of such day, such scenario 

and ForexClear Business; and

(ii) "Largest Combined Loss Value" means, in respect of a business day, 

the largest of the Combined Loss Values determined by the Clearing 

House in respect of such day. 

(c) the "ForexClear Fund Amount" shall equal the sum of (i) the "ForexClear 

Sub-Fund Amount", and (ii) the "ForexClear Tolerance Amount". The 
 

Default Rules

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AprilFebruary 2022

ForexClear Sub-Fund Amount shall be calculated in United States dollars 

("USD") and, for a given ForexClear Determination Date, shall be the largest of 

the Largest Combined Loss Values determined by the Clearing House under 

paragraph (b) above for the preceding 30 business days, plus 10 per cent. The 

ForexClear Sub-Fund Amount shall not be less than USD 70 million (the 

"ForexClear Fund Floor"). The “ForexClear Tolerance Amount” for a given 

ForexClear Determination Date shall equal the aggregate amount of ForexClear 

Tolerance provided by the Clearing House, during a time period determined by 

it, to all participating FXCCMs to facilitate the registration of ForexClear 

Contracts, provided that the ForexClear Tolerance Amount shall not exceed 

USD 500 million;

(d)

(i) an FXCCM's “ForexClear Margin Weight” shall be calculated by 

dividing (A) the Uncovered Stress Loss Metric associated with such 

FXCCM’s ForexClear Contracts by (B) the total Uncovered Stress Loss

Metric applied to all Non-Defaulting FXCCMs with respect to their 

ForexClear Contracts, in each case only for such ForexClear Contracts 

that are open and outstanding at any point during the reference period 

set forth in paragraph (b) above;

(ii) an FXCCM’s “Uncovered Stress Loss Metric,” as determined for the 

purposes of sub-paragraph (i) above, is a risk metric used by the 

Clearing House in the calculation of the FXCCM’s ForexClear 

Contribution and shall be determined by the Clearing House (and 

notified to each FXCCM) from time to time by, inter alia, deducting the 

amount of eligible margin held by the Clearing House with respect to 

the relevant ForexClear Contracts from the stress loss associated with 

such ForexClear Contracts; provided that the Clearing House may, in 

determining the Uncovered Stress Loss Metric of an FXCCM, take into 

account, inter alia, the number of alternative FXCCMs that clear 

ForexClear Contracts with respect to that FXCCM’s ForexClear 

Clearing Clients or FCM Clients; for the avoidance of doubt, the largest 

and second largest stress-testing losses for purposes of determining a 

Combined Loss Value in accordance with paragraph (b) above are not 

the applicable Uncovered Stress Loss Metrics of the relevant FXCCMs 

for the purposes of this sub-paragraph (ii);

(iii) the provisions of this sub-paragraph (d) shall not apply to New Members 

and, for the avoidance of doubt, New Members shall not constitute NonDefaulting FXCCMs for the purposes of limb (B) of sub-paragraph (i);

(e) each FXCCM’s ForexClear Contribution comprises its "ForexClear Sub-Fund

Contribution" and its ForexClear Tolerance, as applicable. The FXCCM's 

ForexClear Sub-Fund Contribution shall be calculated by multiplying the 

ForexClear Sub-Fund Amount by the FXCCM's ForexClear Margin Weight, 

and shall be no less than the Minimum ForexClear Contribution. ; and

(f) subject to a suspension pursuant to paragraph (a) above, the Clearing House 

may recalculate the ForexClear Fund Amount on any business day if the largest 
 

Default Rules

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AprilFebruary 2022

of the Largest Combined Loss Values determined by the Clearing House under 

paragraph (b) above for the 30 business days preceding such business day

differs by more than 25 per cent. from the figure on which the previous 

ForexClear Contribution determination was based.

F3. For the purposes of the calculations under Rule F2:

(a) references to "ForexClear Clearing Members" or "FXCCMs" do not include 

references to Defaulting FXCCMs (apart from any Defaulting FXCCM in 

respect of which the Clearing House permits the application of Rule F2) or 

persons which were formerly FXCCMs but are not FXCCMs at the ForexClear 

Determination Date at which the relevant determination is made;

(b) contributions shall be rounded upwards, if not already such a multiple, to the

next integral multiple of one thousand US dollars;

(c) provided that the FXCCM is not a Defaulter, the amount of its ForexClear 

Contribution shall be calculated in accordance with and subject to Rule F2. The 

provisions of Rule F1, Rule F2, this Rule F3 and Rule F5 do not apply to a 

Defaulting FXCCM, unless the Clearing House so permits in any particular case; 

and

(d) if (i) an FXCCM (other than an FCM Clearing Member) notifies the Clearing 

House on the ForexClear Default Management Process Completion Date or the 

business day occurring immediately after such date that it wishes to resign from 

the ForexClear Service, (ii) the ForexClear AET Requirement in respect of such 

proposed resignation has been satisfied by the ForexClear Determination Date 

occurring immediately after such ForexClear Default Management Process 

Completion Date, (iii) the FXCCM is not a Defaulter, and (iv) no Default has 

occurred from and including the ForexClear Determination Date referred to in 

Rule F3(d)(ii) to and including the fourth business day occurring after such 

ForexClear Determination Date (“ForexClear Contribution Payment Date”), 

then the FXCCM shall cease to be an FXCCM on and from such ForexClear 

Contribution Payment Date and the Clearing House shall repay the ForexClear 

Contribution that it holds for such FXCCM (to the extent it has not been applied 

under these Default Rules) in accordance with the Procedures and the FXCCM 

shall not be obliged to make any payment to the Clearing House under Rule 

F5(c). If an FXCCM notifies the Clearing House in accordance with Rule 

F3(d)(i), but the requirements under Rules F3(d)(ii), (iii) and/or (iv) are not 

satisfied, then such FXCCM will cease to be a Resigning Member in respect of 

the ForexClear Service.

F4. Without prejudice to any other requirements which the Clearing House may impose, 

the amount of the ForexClear Contribution of a New Member shall be the sum of (a) 

the Minimum ForexClear Contribution, (b) any supplementary sum determined by the 

Clearing House in its discretion and notified to the New Member and (c) as applicable, 

its ForexClear Tolerance. The Clearing House shall determine the amount of such 

supplementary sum by reference to the actual or expected level of clearing activity of 

the New Member.
 

Default Rules

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AprilFebruary 2022

F5. Upon determination of the amount of a ForexClear Contribution in accordance with 

Rule F2:

(a) if the amount of the ForexClear Contribution of an FXCCM immediately before 

close of business on the relevant ForexClear Determination Date exceeds the 

amount of the FXCCM's ForexClear Contribution determined under Rule F2 as 

at close of business on that day, the excess shall be paid by the Clearing House 

to such FXCCM in USD (or Euro equivalent, such sum to be determined by the 

Clearing House in its sole discretion) in accordance with the Procedures;

(b) if the amount of the ForexClear Contribution of an FXCCM immediately before 

close of business on the relevant ForexClear Determination Date is the same as 

the amount of the FXCCM's ForexClear Contribution as so determined under 

Rule F2 as at close of business on that day, no sum shall then be payable by or 

to such FXCCM in respect of its Contribution; and

(c) if the amount of the ForexClear Contribution of an FXCCM immediately before 

close of business on the relevant ForexClear Determination Date is less than the 

amount of the FXCCM's ForexClear Contribution as so determined under Rule 

F2 as at close of business on that day, the shortfall shall be paid by such FXCCM 

to the Clearing House in USD (or Euro equivalent, such sum to be determined 

by the Clearing House in its sole discretion) in accordance with the Procedures; 

and

(c)(d) in the event an FXCCM pays its ForexClear Contribution in a Euro equivalent 

amount, the Clearing House may require the payment of additional ForexClear 

Contribution from time to time as a buffer to cover market risk..

The provisions of this Rule do not apply to a Defaulting FXCCM, unless the 

Clearing House so permits in any particular case.

F6. On any day, interest shall accrue on the amount of each ForexClear Contribution held 

by the Clearing House, to the extent that it has not been applied under Rule 19 or Rule 

21 of the Default Rules, at such rate as determined by the Clearing House from time to 

time in light of market conditions and notified by the Clearing House to FXCCMs and 

in such manner as provided by the Procedures, provided that the rate of interest for any 

particular day shall be based on a short-term interest rate of the ForexClear Contribution 

currency, as applicable, plus or minus a spread. Interest shall be payable in arrears and 

shall be paid on the date or dates specified by the Procedures. In these Default Rules, 

any interest which has accrued under this Rule shall not be regarded as being part of 

the ForexClear Contribution.

F7.

(a) After a Default, unless and until the Clearing House has repaid a Defaulter's 

ForexClear Contribution (or the remaining part thereof, as applicable), the 

ForexClear Fund Amount shall be treated as having been reduced by the amount 

of the Defaulter's ForexClear Contribution (if any), regardless of whether the 

Clearing House has applied part or all of that ForexClear Contribution under the 

Default Rules.
 

Default Rules

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AprilFebruary 2022

(b) Where, after a Default, the Clearing House has applied part or all of the 

ForexClear Contributions of the Non-Defaulting FXCCMs under Rule 21 of the 

Default Rules, the ForexClear Fund Amount shall be reduced forthwith by the 

deduction of (i) the amount of the Defaulter's ForexClear Contribution (if any) 

in accordance with paragraph (a) of this Rule F7; and (ii) the aggregate amount 

of the ForexClear Contributions or parts of ForexClear Contributions of the 

Non-Defaulting FXCCMs so applied, and the amount of the ForexClear 

Contribution that each Non-Defaulting FXCCM must maintain with the 

Clearing House shall be reduced by the amount of its ForexClear Contribution 

which has been so applied, in each case, until the next ForexClear Determination 

Date and subject to (where applicable) the requirement under paragraph (c) of 

this Rule F7 and Rule F8. 

(c) Following the completion of a ForexClear Default Management Process, the 

Clearing House will deliver a notice to the FXCCMs confirming that the 

relevant ForexClear Default Management Process Completion Date has 

occurred. If, following the issuance of such notice, the value of the ForexClear 

Fund Amount determined in accordance with paragraph (b) of this Rule F7 is 

less than the ForexClear Fund Floor, the Clearing House may notify each NonDefaulting FXCCM that it is required to make a Supplementary Contribution, 

based on the proportion that the value of its ForexClear Contribution as at the 

last ForexClear Determination Date prior to the date when the relevant Default 

occurred bears to the value of the aggregate ForexClear Contributions of all 

Non-Defaulting FXCCMs as at such date, so as to reinstate the ForexClear Fund 

Amount to a value which is no less than the ForexClear Fund Floor. 

Supplementary Contributions required hereunder shall be paid within two 

business days after notification and in accordance with the Procedures.

F8. Where, after a Default, the Clearing House determines that (i) by reason of a reduction 

in accordance with Rule F7, the value of the ForexClear Fund Amount has been reduced 

by at least 25 per cent.; or (ii) by the time of the ForexClear Default Management 

Process Completion Date in relation to the relevant Default, the value of the ForexClear 

Fund Amount will be reduced by at least 25 per cent., the Clearing House may, by 

notice in writing (the "ForexClear Unfunded Contribution Notice"), require each 

Non-Defaulting FXCCM to deposit and maintain an amount (each a "ForexClear 

Unfunded Contribution") in accordance with the following provisions:

(a) ForexClear Unfunded Contributions will only be payable in circumstances 

where the relevant ForexClear Unfunded Contribution Notice is delivered by 

the Clearing House to FXCCMs prior to the ForexClear Default Management 

Process Completion Date in relation to the relevant Default;

(b) the value of the ForexClear Unfunded Contribution payable by each individual 

FXCCM shall be the product of (i) the percentage by which the value of the 

ForexClear Fund Amount has been reduced and (ii) the value of the ForexClear 

Contribution of such FXCCM as determined by the Clearing House at the last 

ForexClear Determination Date prior to the date when the relevant Default 

occurred. ForexClear Unfunded Contributions may be paid in USD or Euro 

equivalent (such sum to be determined in the Clearing House’s sole discretion),

provided that a FXCCM’s ForexClear Unfunded Contribution must be paid in 

the same currency as its last paid ForexClear Contribution;
 

Default Rules

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AprilFebruary 2022

(c) the Clearing House may, by the delivery of one or more further ForexClear 

Unfunded Contribution Notices, require each Non-Defaulting FXCCM to pay 

one or more further ForexClear Unfunded Contributions in respect of the same 

Default, provided that the total value of the ForexClear Unfunded Contributions 

payable by an individual FXCCM in respect of a particular Default (determined 

in accordance with paragraph (b) above) may not exceed the value of the 

ForexClear Contribution of such FXCCM as at the last ForexClear 

Determination Date prior to the date when the relevant Default occurred; and

(d) following a Default in respect of which ForexClear Unfunded Contributions 

were paid (the "First Default"), the Clearing House may require the payment 

of further ForexClear Unfunded Contributions in respect of subsequent Defaults 

(which, for the avoidance of doubt, can never be a First Default), provided that

ForexClear Unfunded Contributions will not be payable in respect of any more 

than three Defaults in any six month period (commencing on the date of delivery 

of the first ForexClear Unfunded Contribution Notice in respect of the First 

Default).

FXCCMs will be required to deposit the full amount of their ForexClear Unfunded 

Contributions (without exercising any rights of set-off or counterclaim) with the 

Clearing House on the business day following the receipt of a ForexClear Unfunded 

Contribution Notice.

For the avoidance of doubt, references to "FXCCMs" for the purposes of this Rule F8 

include any FXCCM (other than a Defaulting FXCCM) who is: (i) a Retiring Member 

but whose status as a Clearing Member has not yet been terminated; and (ii) a Resigning 

Member whose resignation from the ForexClear Service is not yet effective.

F9. ForexClear Loss Distribution Process

Where, after a Default, the Clearing House determines that the ForexClear Excess Loss 

resulting from the Default will exceed the amounts to be applied to it under Rules 15(a)

to 15(g) of the Default Rules, the Clearing House may implement the process (the 

"ForexClear Loss Distribution Process") described in this Rule F9.

(a) For the purposes of this Rule F9 and Rule F11, the following definitions will 

apply:

"Actual Base Currency Gains, Losses and Realised Cash Flows by Cash 

Payment" means, in respect of each Cash Payment and any business day, the 

sum of the Pre Haircut Base Currency Gains, Losses and Realised Cash Flows 

by Cash Payment and any Cash Gainer Base Currency Adjustment to Cash 

Payment or Cash Loser Base Currency Adjustment to Cash Payment.

"Auction Portfolio" has the meaning assigned to it in the ForexClear DMP 

Annex.

"Available Resources" means, in respect of any Loss Distribution Period, the 

amounts available to the Clearing House for application in meeting any loss 

suffered or incurred by the Clearing House in accordance with Rules 15(a) to 

15(h) of the Default Rules as at the relevant Last Call Prior to Default.