FCM PROCEDURES OF THE CLEARING HOUSE

LCH LIMITED
FCM Procedures FCM SwapClear

LCH Limited © 2022 - 57 - May July 2022

CFTC Regulations or as directed by an applicable Regulatory 

Body.

(g) FCM Rates Service Default Management Disclosure Notice

Each FCM Rates Service Clearing Member must ensure that each 

FCM Client to which it offers FCM SwapClear Clearing Services is 

provided with, or is directed to a copy of, the FCM Rates Service 

Default Management Disclosure Notice, and further must provide 

confirmation, in the form and manner reasonably required by the 

Clearing House, that it has discharged this obligation in respect of each 

such FCM Client.

(h) Contact Information

Each FCM Rates Clearing Member is required to provide the Clearing 

House with contact details for those persons that the Clearing House 

should contact in the event of a Clearing Member Default. FCM Rates 

Clearing Members are required to ensure that contact details remain up 

to date and to notify the Clearing House of any changes in such details.

(i) Notwithstanding the definition of "Auction Losses Calculation 

Period" in Rule 1.6 of Schedule 2 of the Default Rules, on and from 

the date determined by the Clearing House, the following definition 

will apply for the purposes of the Rates Service DMP Annex: 

""Auction Losses Calculation Period" means, in respect of an 

OTC Auction Portfolio or a Basis Portfolio (as applicable) and the 

business day on which the Clearing House auctions and sells such 

portfolio, the period: 

(a) commencing immediately after the Daily Calculation Period 

for the previous business day; and 

(b) ending at the point at which the Clearing House sells such 

portfolio;" 

where: 

"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 Rates Service 

Contracts for such business day."

2.1.18 Payment of Stamp Tax

Each FCM Clearing Member shall pay any stamp tax or duty levied or 

imposed upon it or in respect of its execution or performance of the FCM 

Clearing Membership Agreement, the FCM Default Fund Agreement, the 

FCM Regulations and the FCM Procedures (including any registration of an 

FCM SwapClear Contract) by a jurisdiction in which it is incorporated, 
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LCH Limited © 2022 - 58 - May July 2022

organized, managed and controlled, or considered to have its seat, or in which 

a branch or office through which it is acting is located or by any other 

jurisdiction and shall indemnify the Clearing House against any stamp tax or 

duty levied or imposed upon the Clearing House or in respect of the Clearing 

House's execution or performance of the FCM Clearing Membership 

Agreement, the FCM Regulations and the FCM Procedures (including any 

registration of an FCM SwapClear Contract) by any such jurisdiction.

2.1.19 Section 696, Corporation Tax Act 2009

The FCM Clearing Member agrees that should a situation arise where HM 

Revenue and Customs (“HMRC”) raises an enquiry, or makes an information 

request, to the Clearing House regarding an FCM Transaction or FCM 

Contract that the FCM Clearing Member is submitting (or has submitted) to 

the Clearing House, and that enquiry or information request is in respect of the 

application of s696 - s697 Corporation Tax Act 2009, the FCM Clearing 

Member will use its reasonable efforts to provide such information and 

support as the Clearing House may reasonably require in order to respond to 

and effectively deal with the queries raised by HMRC.

2.1.20 Tax Forms

The Clearing House and each FCM Clearing Member shall provide to the

other party (i) any form or document specified in the given FCM Contract and

(ii) any form, document, statement or certification (including, in the case of

the Clearing House, an Internal Revenue Service Form W-8BEN) reasonably

requested in writing to permit the Clearing House or FCM Clearing Member,

as applicable, to make any payment under the Clearing House’s rules or any

FCM Contract without withholding for any tax, levy or charge. The foregoing

requirement shall not apply in the event the Clearing House or FCM Clearing

Member is not permitted to deliver such form, document, statement or

certification under Applicable Law (including any double-tax treaty).

2.1.21 Withholding Taxes

In the event an FCM Clearing Member is required under Applicable Law to

withhold an amount in respect of any tax, levy or charge from any payment

made to the Clearing House, (i) such amount payable shall be increased such

that the Clearing House receives an amount equal to that it would have

received had such withholding not been required under Applicable Law and (ii)

the FCM Clearing Member shall provide the Clearing House the relevant tax

certificates (or similar form) confirming the payment of such withholding.

The Clearing House shall provide reasonable cooperation to the given FCM

Clearing Member to ensure that payments made to the Clearing House may be

made without deduction or withholding in respect of any tax, levy or charge

2.1.22 Sales Tax; Value Added Tax

All fees and other payments payable under the Clearing House’s rules are

exclusive of sales tax, purchase or turnover tax, levies, duties and their
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LCH Limited © 2022 - 175 - May July 2022

DMA from which such Auction Portfolio was formed, pro rata 

according to the Pre-Default TMR Ratio of each such Affected 

Non-Porting FCM Client Sub-Account.

(G) CFTC Regulations

The Clearing House shall hold the relevant Collateral in respect 

of Non-Porting FCM Client Sub-Accounts (segregated as 

belonging to each such applicable Non-Porting FCM Client 

Sub-Account in accordance with the CFTC Regulations and 

Part 22 thereof) in its applicable FCM Omnibus ForexClear 

Client Account with LCH until the process described in this 

paragraph (f) has been completed. For the avoidance of doubt, 

the Clearing House may only take such actions pursuant to this 

paragraph as permitted by the FCM Rulebook, the CEA and the 

CFTC Regulations or as directed by an applicable Regulatory 

Body.

(H) Notwithstanding the definition of "Auction Losses 

Calculation Period" in Rule 1.4 of Schedule 3 of the Default 

Rules, on and from the date determined by the Clearing House, 

the following definition will apply for the purposes of the 

ForexClear DMP Annex: 

""Auction Losses Calculation Period" means, in 

respect of an Auction Portfolio and the business day on 

which the Clearing House auctions and sells such 

portfolio, the period: 

(a) commencing immediately after the Daily 

Calculation Period for the previous business day; 

and

(b) ending at the point at which the Clearing House 

sells such portfolio;

where: 

"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."

2.2.27 Payment of Stamp Tax

Each FCM Clearing Member shall pay any stamp tax or duty levied or 

imposed upon it or in respect of its execution or performance of the FCM 

Clearing Membership Agreement, the FCM Default Fund Agreement, the 

FCM Regulations and the FCM Procedures (including any registration of an 

FCM ForexClear Contract) by a jurisdiction in which it is incorporated,