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

CORPORATE

VIA CFTC PORTAL

September 20, 2023

Mr. Christopher Kirkpatrick

Commodity Futures Trading Commission

1155 21st Street NW

Three Lafayette Centre

Washington, DC 20581

LCH Limited Self-Certification: Duo compression removal

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 revisions to its rules (“LCH Rules”) related to the removal of the “duo compression” 

functionality in the SwapClear Service.

Part I: Explanation and Analysis

LCH’s SwapClear Service offers compression options by which swap market participants can 

reduce the number of individual positions and overall notional value of a portfolio by combining or 

offsetting trades with compatible characteristics. One of these compression options is “duo 

compression”, whereby LCH will compress selected and eligible SwapClear contracts of two 

SwapClear members. This option has rarely been used by members and as such SwapClear is 

proposing to remove this functionality. Other compression options such as “solo compression”, 

“solo with blended rate” and “multi compression” offered via an Approved Compression Service 

Provider (ACSP) will continue to be offered. The LCH Rules will be updated to reflect the “duo 

compression” option removal. These revisions are in the General Regulations, Procedures 2C, 

FCM Regulations and FCM Procedures.

Part II: Description of Rule Changes

The LCH Rules have been updated to remove references to duo compression and associated 

definitions.

The changes to the LCH Rules are included as Appendices I - IV in black line form. The changes 

will be effective not earlier than October 3, 2023.

Part III: Core Principle Compliance

LCH reviewed the proposed changes to the LCH Rules against the requirements of the Core 

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

Specifically, this change to the LCH Rules has potential relevance to Core Principle L (§39.21)

(Public Information) under the CFTC regulations. 

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

including that, in addition to the applicable provisions of §39.21, LCH makes available any

information that is relevant to participation in the clearing and settlement activities of LCH. LCH 

considered its regulatory requirements with respect to disclosure of public information and believes

the inclusion of rules related to the SwapClear Service compression options in its publicly available 

rulebook reflects its compliance with Core Principle L and CFTC regulation §39.21. As a result, 

LCH believes these changes are consistent with the requirements of Core Principle L on Public 

Information under CFTC regulation §39.21.

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 that were not incorporated into this proposal.

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 lavannyan.mahalinam@lseg.com.

Yours sincerely,

Lavannyan Mahalingam

Regulatory Advisor

LCH Limited
CORPORATE

Appendix I

LCH General Regulations

Changed Pages
Clearing House: General Regulations

- iFebruary June 2023

GENERAL REGULATIONS OF

LCH LIMITED
Clearing House: General Regulations

- 14-

February June 2023

"Collateral Management 

Agreement"

means a collateral management agreement entered into 

between a Custodial Segregated Client, a Clearing Member 

and the Clearing House, which sets out (inter alia) the terms 

on which the Custodial Segregated Client may provide 

Collateral to the Clearing House in respect of the relevant 

Custodial Segregated Account

"Combined Omnibus Gross 

Segregated Clearing Clients"

means two or more Omnibus Gross Segregated Clearing 

Clients within the same Omnibus Gross Segregated Account 

who have elected to have their positions combined for the 

purposes of calculating applicable margin requirements (on 

a net basis as between such Omnibus Gross Segregated 

Clearing Clients as if such Omnibus Gross Segregated 

Clearing Clients together are a single Omnibus Gross 

Segregated Clearing Client for the purposes of the relevant 

calculations)

"Compression Clearing 

Member"

has the meaning assigned to it in General Regulation 56

"Compression 

Documentation"

means such documentation as may be prescribed from time 

to time by the Clearing House and/or any ACSP (where 

applicable) in relation to a Multilateral Compression Cycle 

or a SwapClear Clearing Member’s participation in 

Multilateral Compression services, including:

(i) for a Member Compression Cycle, such agreements 

and documents as the Clearing House may require 

from all relevant SwapClear Clearing Members in 

relation to Multilateral Compression in accordance 

with the relevant Compression Proposal;

(ii)(i) for an ACSP Compression Cycle, such agreements 

and documents as may be required by the nominated 

ACSP and/or the Clearing House in order to allow a 

SwapClear Clearing Member to receive the services 

of the ACSP and participate in that ACSP 

Compression Cycle; and

(iii)(ii) such other documentation as the Clearing House may 

prescribe from time to time in Procedures, user 

manuals or other guidance documentation regarding 

Multilateral Compression.
Clearing House: General Regulations

- 50-

February June 2023

"market" means a futures, options, forward, stock or other market, 

administered by an Exchange, or an OTC market in respect 

of which the Clearing House has agreed with such Exchange 

or, in respect of an OTC market, with certain Participants in 

that market, to provide clearing services on the terms of these 

Regulations and the Procedures

"Market Data" has the meaning assigned to it in Chapter XIV(f)(i)

"market day" means in respect of a commodity, a day on which the market 

on which that commodity is dealt in is open for trading

"Market Deviation Notice" has the meaning assigned to it in Chapter XIV(l)

"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

"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);
Clearing House: General Regulations

- 51-

February June 2023

"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

"Multilateral Compression" means the exercise in which some or all of the SwapClear 

Contracts submitted by two or more Compression Clearing 

Members either on their own account or with respect to a 

SwapClear Clearing Client, for inclusion in a Multilateral 

Compression Cycle are wholly terminated and, where 

relevant, replaced with other SwapClear Contracts 

"Multilateral Compression 

Cycle"

means the process of Multilateral Compression in 

accordance with a Compression Proposal, whether by way 

of an ACSP Compression Cycle or a Member Compression 

Cycle

"Net Recovery" means any sum received by the Clearing House from or for 

the account of a Defaulter after the issue by the Clearing 

House of a Rule 19 Certificate in respect of losses arising 

upon the Defaulter’s Default less any amount payable to any 

insurer or provider of analogous services in respect of any 

amount due from but not previously paid by the Defaulter

"New Member" means, on the day as at which any Contribution is to be 

calculated, any Clearing Member which either has become a 

Clearing Member, or has commenced clearing in respect of 

the relevant Service, since the immediately preceding day 

prescribed for calculating similar Contributions

"Nominated Group Member" has the meaning assigned to it in Chapter XIV(k)

"Non-Affected ForexClear 

Option Clearing Member"

means a ForexClear Option Clearing Member that is not an

Affected ForexClear Option Clearing Member
Clearing House: General Regulations

- 175-

February June 2023

REGULATION 56 COMPRESSION; DECOMPRESSION

(a) The Clearing House may may from time to time determine SwapClear Contracts that 

are eligible for compression or decompression in accordance with this Regulation 56 

and the Procedures (such SwapClear Contracts, “Eligible SwapClear Compression 

Contracts”), which may include SwapClear Contracts that, inter alia, have 

substantially similar economic terms.

(b) A SwapClear Clearing Member may submit a request to the Clearing House, in 

accordance accoardance with the Procedures, to (1) compress and combine all such 

SwapClear Contracts that are registered (a) on the SwapClear Clearing Member’s own 

behalf to its Proprietary Account, (b) on behalf of the same SwapClear Clearing Client

and to the same Client Account (which is not an Indirect Gross Account), or (c) on 

behalf of the same SwapClear Clearing Client and to the same Indirect Gross SubAccount, or (2) decompress and separate selected Eligible SwapClear Compression 

Contracts registered on the SwapClear Clearing Member’s own behalf or on behalf of 

a SwapClear Clearing Client.

(c) The Clearing House will effect the compression or decompression of Eligible 

SwapClear Compression Contracts by terminating the relevant Eligible SwapClear 

Compression Contracts and, in some instances, compressing or decompressing them, 

as the case may be, into one or more new SwapClear Contracts having a net future cash 

flow equal to the net future cash flow of such original Eligible SwapClear Compression 

Contracts (including, for the purposes of determining the net future cash flow of a 

SwapClear STM Contract, the payment obligations of the SwapClear Clearing Member 

and the Clearing House under the SwapClear STM Terms applicable to such SwapClear 

STM Contract). For the avoidance of doubt, in no circumstances can a SwapClear 

Contract registered in the Proprietary Account of a SwapClear Clearing Member be 

compressed or decompressed pursuant to this Regulation 56 with a SwapClear Contract 

registered in the Client Account of that SwapClear Clearing Member.

(d) For the avoidance of doubt, the Clearing House may determine that SwapClear 

Contracts are Eligible SwapClear Compression Contracts even if (i) they have differing 

fixed or floating rates or (ii) they include at least one each of a SwapClear CTM 

Contract and a SwapClear STM Contract. SwapClear Contracts that are compressed 

shall be (a) aggregated if the position of the SwapClear Clearing Member is in the same 

direction on each such SwapClear Contract (i.e., obligations to make payment 

aggregated and rights to receive payment aggregated) or (b) netted if the position of the 

SwapClear Clearing Member is in the opposite direction on two or more of each such 

SwapClear Contracts (i.e., obligations to make payment netted against rights to receive 

payment). 

(e) In most circumstances the SwapClear Contract (if any) that replaces the compressed 

Eligible SwapClear Compression Contracts shall have a notional amount equal to the 

net notional amount of the compressed Eligible SwapClear Compression Contracts, 

however, in some cases the replacement SwapClear Contracts will have an aggregate 

notional amount that is greater than the net notional amount of the compressed 

SwapClear Contracts, provided that in the event that the net notional amount and net 

future cash flows are equal to zero, compression shall result in no replacement 

SwapClear Contracts. The SwapClear Contracts that replace the decompressed Eligible 

SwapClear Compression Contracts shall (1) have substantially identical economic 
Clearing House: General Regulations

- 176-

February June 2023

terms, except for notional, as the relevant Eligible SwapClear Compression Contracts

and (2) will be registered on the SwapClear Clearing Member’s own behalf or on behalf 

of the SwapClear Clearing Client in whose name(s) such SwapClear Contracts were 

registered prior to the compression of such SwapClear Contracts.The Clearing House 

shall determine (in its sole discretion) whether Eligible SwapClear Compression 

Contracts that are the subject of a request for compression or decompression from the 

SwapClear Clearing Member may be compressed or decompressed, as the case may be. 

and, if such Eligible SwapClear Compression Contracts are compressed or 

decompressed, the Clearing House shall determine the resulting terms of the SwapClear 

Contract(s) (if any) that replaces the compressed or decompressed Eligible SwapClear 

Compression Contracts, as the case may be. Such determination shall be binding on the 

SwapClear Clearing Member, absent manifest error. It is a condition for compression

or decompression of Eligible SwapClear Compression Contracts that the amount of 

Collateral that the Clearing House requires in respect of the original Eligible SwapClear 

Compression Contracts is equal to that which is required by the Clearing House in 

respect of the replacement SwapClear Contract(s).

Following the compression or decompression of Eligible SwapClear Compression 

Contracts pursuant to the Regulation 56, and in the event that the Clearing House 

considers in its sole discretion that the post-compression SwapClear Contracts have a 

“small notional amount,” then the Clearing House may, upon written request by the 

relevant SwapClear Clearing Member, effect the termination of the SwapClear 

Contract(s) with a small notional amount. By making a request to terminate SwapClear 

Contracts in accordance with this Regulation 56(e), the relevant SwapClear Clearing 

Member shall be deemed to represent and warrant that: (i) such termination, if effected, 

will be in accordance with Applicable Law; and (ii) it consents to the termination of the 

relevant SwapClear Contracts.

(f) If:

(i) the SwapClear Contracts that are the subject of a SwapClear Clearing Member’s 

compression or decompression request pursuant to the above comprise only 

SwapClear CTM Contracts, then the one or more SwapClear Contracts that 

come into existence immediately following, and as a result of, the compression

or decompression shall all be SwapClear CTM Contracts;

(ii) the SwapClear Contracts that are the subject of a SwapClear Clearing Member’s 

compression or decompression request pursuant to the above comprise only 

SwapClear STM Contracts, then the one or more SwapClear Contracts that 

come into existence immediately following, and as a result of, the compression 

or decompression shall all be SwapClear STM Contracts; and

(iii) the SwapClear Contracts that are the subject of a SwapClear Clearing Member’s 

compression request pursuant to the above comprise both SwapClear CTM 

Contracts and SwapClear STM Contracts, then:

(A) the SwapClear Clearing Member’s compression request pursuant to (a) 

above shall be deemed to be a STM Conversion Request in respect of 

those SwapClear Contracts that are SwapClear CTM Contracts, and 

accordingly Regulation 57A(n)-(q) (inclusive) shall apply; and
Clearing House: General Regulations

- 177-

February June 2023

(B) it shall be a condition precedent to the occurrence of the compression 

requested under this Regulation 56 that the SwapClear CTM Contracts 

that are the subject of the SwapClear Clearing Member’s compression 

request have been converted into SwapClear STM Contracts in 

accordance with Regulation 57A

(g) In addition, the Clearing House may, from time to time in its absolute discretion, make 

available, in accordance with this Regulation 56 and/or the Procedures, Multilateral 

Compression on the basis of a Multilateral Compression Cycle which is either:

(h) an ACSP Compression Cycle, available to SwapClear Clearing Members and/or 

applicable FCM Clearing Members; or

(h) a Member Compression Cycle, where so requested by two Compression Clearing 

Members and agreed to by the Clearing House,

(i)(g) (each such SwapClear Clearing Member, a “Compression Clearing Member”).

(j)(h) In participating in any Multilateral Compression Cycle, a Compression Clearing 

Member:

(i) must be party to relevant Compression Documentation with the Clearing House 

and/or any nominated ACSP at such time as is contemplated in the Compression 

Documentation and from such time up to and including the Compression Time 

for that Multilateral Compression Cycle and at all relevant times must be 

accepted by the Clearing House and/or any nominated ACSP as an entity 

eligible to participate in such Multilateral Compression Cycle;

(ii) in relation to an ACSP Compression Cycle, shall nominate those SwapClear 

Contracts (which may be SwapClear CTM Contracts, SwapClear STM 

Contracts or a combination of the same) that it wishes to make available for 

Multilateral Compression in accordance with the relevant Compression 

Documentation;

(iii) in relation to a Member Compression Cycle, the relevant Compression Clearing 

Members shall provide to the Clearing House a Compression Proposal, 

determined in accordance with the Procedures;

(iv)(iii)agrees and acknowledges that:;

(A) if the Terminating SwapClear Contracts that form part of the 

Compression Proposal comprise both SwapClear CTM Contracts and 

SwapClear STM Contracts, then:

(1) the SwapClear Clearing Member’s identification of the 

SwapClear Contracts that it wishes to make available for 

Multilateral Compression pursuant to (ii) and/or (iii) above shall 

be deemed to be a STM Conversion Request in respect of those 

SwapClear Contracts so identified that are SwapClear CTM 

Contracts, and accordingly Regulation 57A (nm)-(qp)

(inclusive) shall apply; and
Clearing House: General Regulations

- 178-

February June 2023

(2) it shall be a condition precedent to the occurrence of the 

Multilateral Compression requested under this Regulation 56 

that the SwapClear CTM Contracts that are the subject of the 

proposed compression have been converted into SwapClear 

STM Contracts in accordance with Regulation 57A.

(B) if the Terminating SwapClear Contracts that form part of the 

Compression Proposal comprise only SwapClear CTM Contracts, the 

Post-Multilateral Compression Contracts shall also all be SwapClear 

CTM Contracts; and

(C) if the Terminating SwapClear Contracts that form part of the 

Compression Proposal comprise only SwapClear STM Contracts, the 

Post-Multilateral Compression Contracts shall also all be SwapClear 

STM Contracts;.

(v)(iv) warrants and represents to the Clearing House that the terms of its participation 

in the proposed Multilateral Compression Cycle are in compliance with 

Applicable Law; 

(vi)(v) agrees and acknowledges that the Multilateral Compression Cycle will operate, 

and Multilateral Compression shall take place, in accordance with this 

Regulation 56 and/or the Procedures, the relevant Compression Proposal as 

accepted by such Compression Clearing Member, relevant Compression 

Documentation (if any) and such other processes and procedures as may be 

notified by the Clearing House from time to time; and

(vii)(vi) warrants and represents that, in the event thatif it provides or receives 

instructions to or from the Clearing House or to or from the ACSP with respect 

to a SwapClear Clearing Client and in connection with a Multilateral 

Compression Cycle, that it is authorised to provide or receive such instructions 

with respect to such SwapClear Clearing Client.

(k)(i) Where the Clearing House intends to run an ACSP Compression Cycle, it shall 

nominate an ACSP to facilitate such ACSP Compression Cycle and produce the 

Compression Proposal. Such ACSP shall notify Compression Clearing Members 

meeting the criteria at (h)(i) above of the timing and procedure for such ACSP 

Compression Cycle and invite such Compression Clearing Members to confirm their 

interest, either on their own account or with respect to a SwapClear Clearing Client 

(where applicable). The Compression Documentation for such Multilateral 

Compression Cycle shall include any documentation relevant to that ACSP. Additional 

information on the administrative procedures for any Multilateral Compression Cycle 

may be included in the Compression Documentation or other procedures published by 

the Clearing House or a nominated ACSP from time to time or in connection with a 

particular Multilateral Compression Cycle.

(l)(j) In any Multilateral Compression Cycle, Multilateral Compression shall only take place 

in accordance with the terms of a Compression Proposal which has been established 

and accepted by all participating Compression Clearing Members in accordance with 

this Regulation 56, FCM Regulation 46 and/or the Procedures, as applicable. 

Notwithstanding the other provisions of this Regulation 56, the Clearing House shall 
Clearing House: General Regulations

- 179-

February June 2023

determine (in its sole discretion) whether SwapClear Contracts proposed for inclusion 

in a Compression Proposal may be so included.

(m)(k) A Compression Proposal shall:

(i) in relation to an ACSP Compression Cycle, be generated by the nominated 

ACSP in accordance with the relevant Compression Documentation and details 

submitted to the ACSP by participating Compression Clearing Members and be 

communicated by the ACSP to each participating Compression Clearing 

Member in the manner contemplated in the relevant Compression 

Documentation for acceptance; and

(ii) in relation to a Member Compression Cycle, be constituted by the details 

submitted to the Clearing House by the requesting Compression Clearing 

Members (subject to the Clearing House’s determination that such proposed 

details are eligible for Multilateral Compression), and shall form the basis for 

the subsequent acceptance by each requesting Compression Clearing Member; 

and

(iii)(ii) in all cases include only those SwapClear Contracts that are eligible for 

Multilateral Compression in the relevant Multilateral Compression Cycle.

(n)(l) Where it wishes to participate in a Multilateral Compression Cycle, each participating 

Compression Clearing Member shall confirm its acceptance of a Compression Proposal 

in the manner and by the time specified by the Clearing House or otherwise 

contemplated in the relevant Compression Documentation. In relation to an ACSP 

Compression Cycle, each participating Compression Clearing Member agrees and 

acknowledges that the ACSP’s confirmation to the Clearing House that such 

Compression Clearing Member has confirmed its acceptance of the Compression 

Proposal, either on its own account or with respect to a SwapClear Clearing Client

(including, where relevant, with respect to an Indirect Gross Sub-Account), to the 

ACSP shall constitute a binding acceptance by such Compression Clearing Member to 

the Clearing House for the purposes of this Regulation 56. Upon a Compression 

Clearing Member’s acceptance of a Compression Proposal in accordance with this 

paragraph, either on its own account or with respect to a SwapClear Clearing Client

(including, where relevant, with respect to an Indirect Gross Sub-Account), such 

Compression Clearing Member shall be irrevocably bound to the terms of that 

Compression Proposal and the Multilateral Compression contemplated thereunder.

(o)(m) The Clearing House may require margin, subsequent to a Compression Clearing 

Member’s acceptance of a Compression Proposal but prior to the Compression Time, 

in connection with the Multilateral Compression Cycle and the Compression Clearing 

Member’s positions thereunder.

(p)(n) Each Compression Clearing Member that confirms its acceptance of a Compression 

Proposal in accordance with relevant Compression Documentation and/or the 

Procedures agrees and acknowledges for the benefit of the Clearing House that, by its 

acceptance, such Compression Clearing Member:
Clearing House: General Regulations

- 180-

February June 2023

(i) shall be bound by and act in accordance with the terms of this Regulation 56, 

the Compression Documentation and any notifications made by the Clearing 

House or any nominated ACSP pursuant thereto;

(ii) shall meet any margin calls from the Clearing House made prior to the 

Compression Time, and shall pay to the Clearing House any amounts that have 

become due and payable to the Clearing House under the SwapClear STM 

Terms at or prior to the Compression Time, in connection with the Multilateral 

Compression Cycle. Any such margin will be called, and any such amounts 

shall be paid, in accordance with the Procedures; and

(iii) is bound by the terms of the Compression Proposal and the terminations and, 

where applicable, registrations of SwapClear Contracts comprised therein.

(q)(o) Following acceptance of the Compression Proposal by all participating Compression

Clearing Members, the Clearing House shall effect Multilateral Compression at such

time as it may determine. For the avoidance of doubt, the irrevocable acceptance of a 

Compression Proposal by participating Compression Clearing Members shall not bind 

or require the Clearing House to proceed with a Multilateral Compression Cycle. At 

any time prior to the Compression Time, the Clearing House may, in its sole and 

absolute discretion, decide not to proceed with a Multilateral Compression Cycle.

(r)(p) Without prejudice to the rights of the Clearing House set out in paragraph (o) above, a 

Compression Proposal shall be rejected by the Clearing House if:

(i) a Compression Clearing Member that has accepted a Compression Proposal is 

not eligible to participate in the relevant Multilateral Compression Cycle;

(ii) any of the SwapClear Contracts included as a Post-Multilateral Compression 

Contract or a Terminating SwapClear Contract are not eligible for such 

Multilateral Compression Cycle; or

(iii) in relation to a Member Compression Cycle, the proposals submitted by the 

relevant Compression Clearing Members do not match; or

(iv)(iii)any Compression Clearing Member due to participate in a Multilateral 

Compression Cycle rejects the Compression Proposal or does not provide the 

margin, or make any other payments, as required by the Clearing House (a 

“Rejecting Compression Clearing Member”).

(s)(q) When the Clearing House effects a Multilateral Compression, it shall terminate all 

Terminating SwapClear Contracts and, where the Multilateral Compression includes 

the registration of Post-Multilateral Compression Contracts, simultaneously with and 

contingent upon the termination of such Terminating SwapClear Contracts, shall 

register the Post-Multilateral Compression Contracts in the name of the relevant 

Compression Clearing Members (either in their respective Proprietary Account or 

Client Account, as applicable). The Clearing House shall notify the participating 

Compression Clearing Members once the Multilateral Compression has been effected. 

Compression Clearing Members are responsible for providing notifications to 

SwapClear Clearing Clients.
Clearing House: General Regulations

- 181-

February June 2023

(t)(r) Unless otherwise stated in the relevant Compression Documentation, the Clearing 

House shall have no involvement in and accepts no responsibility or liability in relation 

to any Multilateral Compression-related balancing, termination or ancillary payments 

or fees that participating Compression Clearing Members (or SwapClear Clearing 

Clients) may agree between themselves in accordance with relevant Compression 

Documentation or otherwise. In the event the Clearing House agrees to participate in 

the processing of ancillary payments or fees pursuant to the relevant Compression 

Documentation, the Clearing House accepts no liability to any Compression Clearing 

Member, SwapClear Clearing Client or third party in connection with or related to the 

processing of such ancillary payments or fees.

(u)(s) Without prejudice to any other provisions of these Regulations, in particular Regulation 

45, or any Compression Documentation, neither the Clearing House, nor any other 

member of LCH Group shall have any liability whatsoever to any Compression 

Clearing Member or to any other person (including any SwapClear Clearing Client and 

any Indirect Clearing Client) in contract, tort (including, without limitation, 

negligence), trust, as a fiduciary or under any other cause of action in respect of any 

damages, losses, costs or expenses of whatsoever nature suffered or incurred by a 

Compression Clearing Member or any other person (including any SwapClear Clearing 

Client and any Indirect Clearing Client), as the case may be, as a result of:

(i) as a result of any action the Clearing House takes under this Regulation 56, 

whether in accordance with a Compression Proposal, in reliance on information 

provided by Compression Clearing Members or any ACSP or otherwise; or

(ii) in relation to an ACSP Compression Cycle, as a result of any action or omission 

of an ACSP, including, without limitation, any error or omission in the terms of 

any Compression Proposal.; or

(iii)(ii) in relation to any Multilateral Compression Cycle, as a result of any action or 

omission of a participating Compression Clearing Member, including, without 

limitation, any error or omission in the terms of any Compression Proposal.

(v)(t) An ACSP’s liability in respect of its acts or omissions is subject to the relevant terms 

of the applicable Compression Documentation.

(w)(u) Any notification or communication required in connection with a Multilateral 

Compression Cycle shall be made in accordance with the Compression Documentation 

(if any) or, if not specified in the Compression Documentation, the Procedures or such 

other guidance as the Clearing House may provide from time to time.

(x)(v) Notwithstanding any other provision of these Regulations or the terms of the SwapClear 

Contracts, the Clearing House may disclose details of any Compression Proposal and 

related details of Compression Clearing Members including (with respect to their 

Proprietary Accounts and Client Accounts) to any ACSP or otherwise as the Clearing 

House considers appropriate in order to facilitate a Multilateral Compression Cycle.

(y)(w) Where a Clearing Member is a Rejecting Compression Clearing Member with respect 

to a Multilateral Compression Cycle and acting with respect to one or more of its Client 

Accounts, the Clearing House may, in its sole discretion, prevent such Clearing 

Member from participating in future Multilateral Compression Cycles with respect to 
Clearing House: General Regulations

- 182-

February June 2023

its Client Account unless or until the Clearing House considers such Client Account

operationally capable of doing so, in its sole discretion.

(z)(x) Unallocated SCM SwapClear Transactions. In accordance with all other applicable 

provisions of the Rulebook, a SwapClear Clearing Member may register a SwapClear 

Contract subject to post-registration allocation on behalf of a Pre-Allocation Executing 

Party in accordance with the following provisions: 

(i) In order for a SwapClear Tranasction executed by a Pre-Allocation Executing 

Party to be subject to post-registration allocation (such transaction, an 

“Unallocated SCM SwapClear Transaction”), the SwapClear Clearing 

Member that will be registering the Unallocated SCM SwapClear Transaction 

(such SwapClear Clearing Member, a “Pre-Allocation SwapClear Clearing 

Member”) must have notified the Clearing House that it wishes to establish an 

SCM SwapClear Suspension Sub-Account with respect to that Pre-Allocation 

Executing Party and the Clearing House shall have opened such SCM 

SwapClear Suspension Sub-Account for the SwapClear Clearing Member. 

(ii) The SwapClear Contract registered on behalf of a Pre-Allocation Executing 

Party that results from an Unallocated SCM SwapClear Transaction (an 

“Unallocated SCM SwapClear Contract”) shall be registered in the SCM 

SwapClear Suspension Sub-Account. The beneficial owner of the Unallocated 

SCM SwapClear Contract shall be the unidentified SwapClear Clearing Client 

on whose behalf the Unallocated SCM SwapClear Transaction was executed. 

(iii) In order to allocate an Unallocated SCM SwapClear Transaction, a PreAllocation Executing Party or Pre-Allocation SwapClear Clearing Member 

must provide the Clearing House with one or more Allocation Notices. Each 

Allocation Notice shall be delivered to the Clearing House via an Approved 

Trade Source System, the SwapClear API or such other means as notified by 

the Clearing House. Clearing Members agree that Clearing Clients (including 

FCM Clients) may provide Allocation Notices to the Clearing House on their behalf

via the SwapClear Portal.

(iv) Where the foregoing delivery methods are unavailable, or in such other 

circumstances that the Clearing House deems appropriate, the Pre-Allocation 

Executing Party or Pre-Allocation SwapClear Clearing Member as the case may be 

may provide the Allocation Notice in the form of a direct written request, subject 

that the processing of an Allocation Notice received as a direct written request may 

take the Clearing House up to five (5) Business Days. 

(v) Where an Allocation Notice: (i) contains instructions that would result in the 

allocation of a notional value that is greater than the notional value of the 

Unallocated SCM SwapClear Contract to which such Allocation Notice relates; or 

(ii) does not relate to an Unallocated SCM SwapClear Contract; or (iii) seeks to 

allocate part of all of an Unallocated SCM SwapClear Contract to a Proprietary 

Account of a SwapClear Clearing Member other than the Pre-Allocation 

SwapClear Clearing Member, then such Allocation Notice shall be ineligible and 

shall be rejected by the Clearing House. For the avoidance of doubt, the PostAllocation Clearing Member(s) need not be the same as the Pre-Allocation 

SwapClear Clearing Member. Unless or until the Clearing House receives an

eligible Allocation Notice, the Unallocated SCM SwapClear Contract shall remain 
Clearing House: General Regulations

- 183-

February June 2023

in the Pre-Allocation SwapClear Clearing Member’s SCM SwapClear Suspension 

Sub-Account and subject to the rules of the Clearing House. 

(vi) Following receipt of an eligible Allocation Notice, the Clearing House shall 

(following acceptance from the relevant Post-Allocation Clearing Member(s) and 

the Pre-Allocation SwapClear Clearing Member, in the same manner as a new 

SwapClear Transaction is accepted in accordance with the Procedures): 

(A) close out the outstanding Unallocated SCM SwapClear Contract and 

simultaneously register two or more (as applicable) SwapClear Contracts 

to the same SCM SwapClear Suspension Sub-Account, and these newly 

registered SwapClear Contracts shall have the same Economic Terms as 

the Unallocated SCM SwapClear Contract except that they shall have lower 

notional values corresponding to the allocation instructions provided in the 

Allocation Notice (which notional values shall, in the aggregate, equal the 

notional value of the Unallocated SCM SwapClear Contract) – for the 

purpose of the foregoing, if the Allocation Notice has not allocated the full 

notional value of the Unallocated SCM SwapClear Contract, one of the 

SwapClear Contracts so registered by the Clearing House shall be a new 

Unallocated SCM SwapClear Contract with a notional value equal to that 

portion of the Unallocated SCM SwapClear Contract that has not been 

allocated; and 

(B) following the actions described in paragraph (A) above, transfer one or 

more of the newly registered SwapClear Contracts resulting from the 

cancellation of the Unallocated SCM SwapClear Contract to the applicable 

Client Segregated Sub-Accounts, Client Account or Proprietary Account in 

accordance with the Allocation Notice. Following the transfer of one or 

more of the newly registered SwapClear Contracts, any remaining 

SwapClear Contract that has not been transferred shall thereafter be the 

Unallocated SCM SwapClear Contract. 

Where an Allocation Notice directs the entire notional amount of an Unallocated 

SCM SwapClear Contract to be allocated to a single Client Segregated SubAccount, Client Account or the Proprietary Account, then the Clearing House shall 

not take the steps described in sub-paragraphs (A) and (B) above and shall instead 

transfer the Unallocated SCM SwapClear Contract to the applicable Client 

Segregated Sub-Account, Client Account or Proprietary Account following receipt 

of the Allocation Notice. 

Where the transfer is from an SCM SwapClear Suspension Sub-Account to a Client 

Segregated Sub-Account, the relevant SwapClear Contract shall be converted to an 

FCM SwapClear Contract. 

By a Pre-Allocation SwapClear Clearing Member delivering an eligible Allocation 

Notice to the Clearing House, that Pre-Allocation SwapClear Clearing Member 

shall be deemed to represent and warrant that it has been properly authorized by the 

Pre-Allocation Executing Party to allocate the relevant Unallocated SCM 

SwapClear Contract or, where the allocation is to such Pre-Allocation SwapClear 

Clearing Member’s Proprietary Account, in accordance with paragraph (vii) below. 

Where the Clearing House receives an ineligible Allocation Notice, the Unallocated 

SCM SwapClear Transaction to which it relates shall remain in the SCM SwapClear 

Suspension Sub-Account.
Clearing House: General Regulations

- 184-

February June 2023

(vii) Subject to paragraph (viii) below, the transfer of an Unallocated SCM SwapClear 

Contract from the SCM SwapClear Suspension Sub-Account to a Client Segregated 

Sub-Account, Client Account or Proprietary Account shall be final. In no event can 

Unallocated SCM SwapClear Contracts be further allocated once they are 

transferred from the SCM SwapClear Suspension Sub-Account. 

(viii) Where an Unallocated SCM SwapClear Contract has been registered to an SCM 

SwapClear Suspension Sub-Account and is not allocated by the Pre-Execution 

Allocating Party or in such other circumstances that the Clearing House considers 

appropriate, the Pre-Allocation SwapClear Clearing Member may submit an 

Allocation Notice to the Clearing House requesting the transfer of the relevant 

Unallocated SCM SwapClear Contract to that SwapClear Clearing Member’s 

Proprietary Account. A SwapClear Clearing Member, through requesting such 

transfer, shall be deemed to represent that such transfer is in accordance with 

Applicable Law and regulation and the SwapClear Clearing Member’s contractual 

rights against the Pre-Allocation Executing Party or, if applicable, the PreAllocation Executing Party’s underlying customer(s). 

(ix) Where an Unallocated SCM SwapClear Contract has been erroneously allocated to 

a Client Segregated Sub-Account or Client Account, the Clearing House will, in 

response to a written request from a Post-Allocation Clearing Member and subject 

to acceptance of the transfer by the relevant Pre-Allocation SwapClear Clearing 

Member, transfer a SwapClear Contract or FCM SwapClear Contract (as 

applicable) to the SCM SwapClear Suspension Sub-Account from which that 

SwapClear Contract was allocated. Following such transfer, the SwapClear 

Contract shall be treated as an Unallocated SCM SwapClear Contract, except that 

the provisions of FCM Regulation 46(o)(iv) shall not apply to it, such that an overallocation will not be ineligible and will result in the allocation of the notional 

amount prescribed in an Allocation Notice. Any transfer pursuant to this paragraph 

(viii) must be requested within three Business Days of the original allocation to the 

relevant Client Segregated Sub-Account or Client Account. Through requesting a 

transfer pursuant to this paragraph (viii), the Post-Allocation Clearing Member 

shall be deemed to represent and warrant that the transfer is in accordance with 

Applicable Law. 

(x) The registration and allocation of Unallocated SCM SwapClear Contracts as set 

forth above is subject to all other applicable provisions of the Rulebook including, 

where applicable, and to the same extent as if an Unallocated SCM SwapClear 

Transaction or Allocation Notice were a new SwapClear Transaction with respect 

to the relevant account: (A) the provision by the Pre-Allocation SwapClear 

Clearing Member of adequate Margin in the SCM SwapClear Suspension SubAccount at the time of registration of the Unallocated SCM SwapClear Contract; 

(B) the provision by the applicable Post-Allocation Clearing Member(s) of 

adequate Margin, at the time of the transfer of the relevant Unallocated SCM 

SwapClear Contract, in respect of each of the applicable Client Segregated SubAccounts, Client Accounts or Proprietary Account to which an Unallocated SCM 

SwapClear Contract is to be allocated. If adequate Margin is not so provided in 

respect of each Proprietary Account, Client Account and Client Segregated SubAccount, the Clearing House may in its sole discretion, delay or reject the allocation 

and transfer all or any portions of the Unallocated SwapClear SCM Contract, and 

may take any other actions permitted under the Rulebook. 
Clearing House: General Regulations

- 191-

February June 2023

(D) any other amounts which are payable by the Clearing House to the 

SwapClear Clearing Member on such Business Day (excluding any 

amounts which are Charged Cash Collateral),

and the amount payable on a Business Day to one party (the Payee) by the other party 

(the Payer) under Regulation 57A(k)(i) or (ii) (as applicable) shall be reduced by 

setting-off such amount against the amount (the Other Amount) payable by the Payee

to the Payer under Regulation 57A(k)(i) or (ii) (as applicable). To the extent the Other 

Amount is so applied, the Other Amount will be discharged promptly and in all respects.

(l) On each Business Day the Clearing House shall, to the extent that the following

amounts are payable in the same currency and in respect of the same Client Account 

(that is not an Indirect Gross Account), Proprietary Account or Indirect Gross SubAccount (as applicable) aggregate or set off (as applicable):

(i) the amount that is payable by either the SwapClear Clearing Member or the 

Clearing House following the operation of the payment netting provision under 

Regulation 57(d); and 

(ii) the amount that is payable by either the SwapClear Clearing Member or the 

Clearing House following the operation of the payment netting provision under 

Regulation 57A(k), 

and only the resulting aggregate or net amount shall be payable by either the SwapClear 

Clearing Member or the Clearing House (as applicable). To the extent one amount (the 

“Smaller Amount”) is applied and set off against another larger amount, such Smaller 

Amount will be discharged promptly and in all respects.

(m) The Clearing House and the SwapClear Clearing Member agree that satisfaction of the 

payment obligation arising under the SwapClear STM Terms by either party shall 

discharge such obligation for the purpose of settling the then outstanding exposure 

under a SwapClear STM Contract.

(n) A SwapClear Clearing Member (a “Converting SwapClear Clearing Member”) or a 

Clearing Client (including an FCM Client) on its behalf may, from time to time, submit 

a request, in such form as permitted by the Clearing House from time to time in its sole 

discretion, or, in the case of a compression of the type described in Regulation 

56(fc)(iii) or Regulation 56(he)(iv)(A), a SwapClear Clearing Member or a Clearing 

Client (including an FCM Client) on its behalf shall be deemed to have submitted a 

written request (each such request, an “STM Conversion Request”) to the Clearing 

House requesting that the Clearing House converts one or more of its open SwapClear 

CTM Contracts to SwapClear STM Contracts. Such request shall identify those 

SwapClear CTM Contracts (the “STM Conversion Contracts”) which the SwapClear 

Clearing Member or a Clearing Client (including an FCM Client) on its behalf wishes 

to be converted to SwapClear STM Contracts. No open SwapClear CTM Contract shall 

be converted into a SwapClear STM Contract except as provided in this Regulation 

57A or the Procedures.

(o) Following its receipt of an STM Conversion Request made (or deemed to have been 

made) by a Converting SwapClear Clearing Member pursuant to (nm) above, the 

Clearing House may, in its sole and absolute discretion, nominate a Business Day (the 
Clearing House: General Regulations

- 192-

February June 2023

“STM Conversion Date”) from, and including which, some or all of the STM 

Conversion Contracts shall, subject to the satisfaction of the conditions specified in (po) 

below, cease to be registered as SwapClear CTM Contracts and shall immediately and 

automatically become registered as SwapClear STM Contracts which are subject to this 

Regulation 57A and the SwapClear STM Terms. For the avoidance of doubt, if the 

Clearing House determines that it shall convert a SwapClear CTM Contract into a 

SwapClear STM Contract, such conversion shall be effected through the Clearing 

House and the Converting SwapClear Clearing Member agreeing to a modification of 

the terms of the relevant STM Conversion Contract, and such conversion shall not be 

effected through the Clearing House and the Converting SwapClear Clearing Member 

terminating the relevant STM Conversion Contract and entering into a new SwapClear 

STM Contract.

(p) The occurrence of an STM Conversion Date in respect of an STM Conversion Contract 

shall be subject to the condition precedent that:

(i) the Converting SwapClear Clearing Member is not a Defaulter;

(ii) no relevant SwapClear Clearing Client is insolvent;

(iii) the conversion of that STM Conversion Contract to a SwapClear STM Contract 

would not violate or result in the violation of any Applicable Law;

(iv) the Converting SwapClear Clearing Member has satisfied all of its obligations 

to meet any margin calls made by the Clearing House in respect of that STM 

Conversion Contract up to, but excluding, the STM Conversion Date. The 

Converting Clearing Member shall satisfy such margin calls in accordance with 

the Procedures and/or applicable Regulations, as would ordinarily be the case;

(v) the Converting SwapClear Clearing Member has paid to the Clearing House, or 

the Clearing House has paid to the Converting SwapClear Clearing Member (as 

applicable), any cash settlement amount that the Clearing House determines (in 

its sole and absolute discretion) must be paid to ensure that the net present value 

of the STM Conversion Contract shall be equal to zero on the STM Conversion 

Date. Such amounts shall be determined and paid by the relevant party in 

accordance with the Procedures. The Converting SwapClear Clearing Member 

and the Clearing House agree that the Clearing House may, in its sole and 

absolute discretion, apply any Collateral held by it in respect of a STM 

Conversion Contract to satisfy (in whole or in part) the Converting SwapClear 

Clearing Member’s obligation to pay the amount (if any) required under this 

Regulation 57A(po)(v) in relation to that STM Conversion Contract. The 

Converting SwapClear Member and the Clearing House agree that any 

Collateral held by the Converting SwapClear Clearing Member in respect of a 

STM Conversion Contract shall be applied to satisfy (in whole or in part) the 

Clearing House’s obligation to pay the amount (if any) required under this 

Regulation 57A(po)(v) in relation to that STM Conversion Contract; and

(vi) all other conditions stipulated by the Clearing House have been complied with 

in a manner satisfactory to it.
CORPORATE

Appendix II

LCH FCM Regulations

Changed Pages
CORPORATE

FCM REGULATIONS OF THE CLEARING HOUSE

LCH LIMITED
FCM Regulations

- 6 -

JuneDecember 20232

(where such FCM Contract consists of positions “X” and 

“Y”), the Clearing House shall have position “Y” under the 

terms of such closing-out FCM Contract, and vice-versa.

“CMS” means the Clearing House’s collateral management system

“Collateral” means the cash, securities or other collateral or assets 

deposited with or to be deposited with (as the context may 

require) the Clearing House by an FCM Clearing Member 

or otherwise furnished to (including any proceeds 

therefrom) an FCM Clearing Member’s Proprietary 

Account or its FCM Omnibus Client Accounts with LCH 

for the purpose of margining, guaranteeing and/or 

securing (as Margin) FCM Contracts for such accounts, 

provided, that "Collateral" shall not include any 

Settlement Payment, to the extent such Settlement 

Payment is transferred in accordance with the FCM 

Regulations. The Clearing House will only credit 

deposited securities or other non-cash collateral or assets 

as Collateral to the extent such securities or other noncash 

collateral or assets are acceptable forms of collateral as set 

forth in the FCM Procedures or as otherwise explicitly 

permitted by the Clearing House. For the avoidance of 

doubt, Collateral will not include, and will not be 

comprised of, an FCM Clearing Member’s Contribution.

“Commodity” or 

“commodity”

means any “commodity” (as such term is defined in Section 

1a(9) of the CEA and CFTC Regulation 1.3(e)) that is the 

subject matter of an FCM Exchange Contract or an FCM 

Listed Interest Rates Contract.

“Contribution” has the meaning assigned to it in the UK General 

Regulations, and as used herein refers to one or more of the 

Contributions of one or more FCM Clearing Members or 

Non-FCM Clearing Members, as the context may require.

“Compression Clearing 

Member”

has the meaning assigned to it in Regulation 46(n)

“Compression 

Documentation”

means such documentation as may be prescribed from time 

to time by the Clearing House and/or any ACSP (where 

applicable) in relation to a Multilateral Compression Cycle 

or a Compression Clearing Member’s participation in 

Multilateral Compression services, including:

(i) for a Member Compression Cycle, such agreements 

and documents as the Clearing House may require 

from all relevant Compression Clearing Members 

in relation to Multilateral Compression in 

accordance with the relevant Compression 

Proposal;
FCM Regulations

- 7 -

JuneDecember 20232

(ii)(i) for an ACSP Compression Cycle, such agreements 

and documents as may be required by the 

nominated ACSP and/or the Clearing House in 

order to allow a Compression Clearing Member to 

receive the services of the ACSP and participate in 

that ACSP Compression Cycle; and

(iii)(ii) such other documentation as the Clearing House 

may prescribe from time to time in FCM 

Procedures, user manuals or other guidance 

documentation regarding Multilateral 

Compression.

“Compression Proposal” means, in relation to any Multilateral Compression Cycle, 

the final statement as to the proposed set of Terminating 

FCM SwapClear Contracts and the proposed set of 

resulting Post-Multilateral Compression Contracts, and, in 

relation to a Compression Clearing Member, references to 

Compression Proposal shall relate to such Terminating 

FCM SwapClear Contracts and Post-Multilateral 

Compression Contracts to which such Compression 

Clearing Member is or will become party.

“Compression Time” means, on the date designated by the Clearing House for a 

Multilateral Compression Cycle, the time at which the 

Clearing House effects a Multilateral Compression by 

terminating the Terminating FCM SwapClear Contracts 

and simultaneously registering the Post-Multilateral 

Compression Contracts in the names of the Compression 

Clearing Members participating in that Multilateral 

Compression Cycle in accordance with the Compression 

Proposal.

“Coupons” has the meaning assigned to such term in the FCM 

Procedures

“cover” means either Collateral, Margin or both, as the context may 

require as used in the FCM Rulebook.

“CVR” or “Collateral Value 

Report”

has the meaning assigned to it in FCM Regulation 15(d)(ii).

“Cumulative Variation 

Settlement”

has the meaning assigned to it in the FCM Procedures.

“Default” has the meaning assigned to it in the UK General 

Regulations.

“Defaulter” has the meaning assigned to it in rule 4 of the Default Rules.
FCM Regulations

- 26 -

JuneDecember 20232

“Listed Interest Rates 

Clearing Member”

means a person who is designated as such by the Clearing 

House pursuant to the UK General Regulations and who is 

not an FCM Clearing Member.

“Listed Interest Rates 

Contribution”

has the meaning assigned to it in the UK General 

Regulations.

“Listed Interest Rates 

Determination Date”

has the meaning assigned to it in the UK General 

Regulations.

“Lot” means the standard unit or quantity prescribed as the 

trading unit of an FCM Contract by, as applicable: (i) an 

Exchange, with the approval of the Clearing House; or (ii) 

the relevant provisions of the FCM Product Specific

Contract Terms and Eligibility Criteria Manual.

“Margin” means, with respect to a particular account or accounts of 

an FCM Clearing Member with the Clearing House, the 

Collateral value that is attributable to such account or 

accounts as margin for the margining of FCM Contracts in 

such account or accounts, as determined by the Clearing 

House in accordance with the FCM Rulebook.

“Member Compression 

Cycle”

means a Multilateral Compression Cycle requested by two 

or more Compression Clearing Members and agreed to by 

the Clearing House in relation to eligible FCM SwapClear 

Contracts held by those requesting Compression Clearing 

Members. For the avoidance of doubt, a Member 

Compression Cycle will not involve any ACSP.

“Multilateral 

Compression”

means the exercise in which some or all of the FCM 

SwapClear Contracts or Non-FCM SwapClear Contracts, 

as applicable, submitted by two or more Compression 

Clearing Members (either on their own behalf or on behalf 

of an Authorised Compression Client), as applicable, for 

inclusion in a Multilateral Compression Cycle are wholly 

terminated and, where relevant, replaced with other FCM 

SwapClear Contracts or Non-FCM SwapClear Contracts.

“Multilateral Compression 

Cycle”

means the process of Multilateral Compression in 

accordance with a Compression Proposal, whether by way 

of an ACSP Compression Cycle or a Member Compression 

Cycle.

“MER” Has the meaning assigned to it in Section 2.1.3(c) of the 

FCM Procedures.

“Nominated FCM Client” has the meaning assigned to it in the FCM Procedures. 
FCM Regulations

- 145 -

JuneDecember 20232

rights and obligations under such FCM SwapClear Transaction which fall due 

for performance on or after the Registration Time;

(ii) each FCM SwapClear Contract registered under FCM Regulation 46(j) above 

shall be governed by the FCM SwapClear Contract Terms as applicable to that 

FCM SwapClear Contract;

(iii) subject to sub-paragraph (ii) above, in respect of the Economic Terms, the FCM 

Clearing Member shall have the same rights against, and owe the same 

obligations to, the Clearing House under the FCM SwapClear Contract as the 

party paying Rate X had and owed in respect of its counterparty under the 

corresponding FCM SwapClear Transaction; and

(iv) subject to sub-paragraph (ii) above, in respect of the Economic Terms, the FCM 

Clearing Member shall have the same rights against, and owe the same 

obligations to, the Clearing House under the FCM SwapClear Contract to which 

it is party as the party paying Rate Y had and owed in respect of its counterparty 

under the corresponding FCM SwapClear Transaction.

In subparagraphs (iii) and (iv) above, a reference to the “same” rights or obligations is 

a reference to rights or obligations, falling due for exercise or performance after the 

Registration Time, and which are the same in nature and character as the rights or 

obligations arising from the Economic Terms of the corresponding FCM SwapClear 

Transaction (it being assumed, for this purpose, that such FCM SwapClear Transaction 

was a legal, valid, binding and enforceable obligation of the parties thereto and that the 

Economic Terms thereof were as presented to the Clearing House for registration), 

notwithstanding the change in the person entitled to them or obliged to perform them, 

and subject to any change thereto as a result of the operation of the Standard Terms.

(l) If an FCM SwapClear Transaction is revoked, avoided or otherwise declared invalid 

for any reason after particulars of it have been accepted by the Clearing House for 

registration that revocation, avoidance or invalidity shall not affect any FCM 

SwapClear Contract arising under this FCM Regulation 46 or any other applicable 

provision of the FCM Rulebook.

(m) In the case of an FCM SwapClear Contract registered by the Clearing House pursuant 

to rule 6(a) of the Default Rules, the Registration Time shall be deemed to be the time 

chosen by the Clearing House whereupon this FCM Regulation 46 shall take effect.

(n) Compression. 

(i) The Clearing House may from time to time determine FCM SwapClear 

Contracts that are eligible for compression or decompression in accordance with 

this Regulation 46(n) and the FCM Procedures (such FCM SwapClear 

Contracts, “Eligible FCM SwapClear Compression Contracts”), which may 

include FCM SwapClear Contracts that, inter alia, have substantially similar 

economic terms.

(ii) An FCM Clearing Member may submit a request to the Clearing House, in 

accordance with the FCM Procedures, to (1) to compress and combine all such 

FCM SwapClear Contracts that are either (i) registered on the FCM Clearing 
FCM Regulations

- 146 -

JuneDecember 20232

Member's own behalf or (ii) registered on behalf of the same FCM Client, or (2) 

decompress and separate selected Eligible FCM SwapClear Compression 

Contracts registered on the FCM Clearing Member’s own behalf or on behalf 

of an FCM Client.

(iii) The Clearing House will effect the compression or decompression of Eligible 

FCM SwapClear Compression Contracts by terminating the relevant Eligible 

FCM SwapClear Compression Contracts and, in some instances, compressing 

or decompression them, as the case may be, into one or more new FCM 

SwapClear Contracts having a net future cash flow equal to the net future cash 

flow of the original Eligible FCM SwapClear Compression Contracts. 

(iv) For the avoidance of doubt, the Clearing House may determine that FCM 

SwapClear Contracts are Eligible FCM SwapClear Compression Contracts even 

if they have differing fixed or floating rates. FCM SwapClear Contracts that are 

compressed shall be (i) aggregated if the position of the FCM Clearing Member 

(on its own behalf) or the relevant FCM Client is in the same direction on each 

such FCM SwapClear Contract (i.e., obligations to make payment aggregated 

and rights to receive payment aggregated) or (ii) netted if the position of the 

FCM Clearing Member (on its own behalf) or the relevant FCM Client is in the 

opposite direction on two or more of each such FCM SwapClear Contracts (i.e., 

obligations to make payment netted against rights to receive payment). 

(v) In most circumstances, the FCM SwapClear Contract (if any) that replaces the 

compressed Eligible FCM SwapClear Compression Contracts shall have a 

notional amount equal to the net notional amount of the compressed Eligible 

FCM SwapClear Compression Contracts, however, in some cases the 

replacement FCM SwapClear Contracts will have an aggregate notional amount 

that is greater than the net notional amount of the compressed FCM SwapClear 

Contracts, provided that that in the event that the net notional amount and net 

future cash flows are equal to zero, compression shall result in no replacement 

FCM SwapClear Contracts. The FCM SwapClear Contracts that replace the 

decompressed Eligible FCM SwapClear Compression Contracts shall (1) have 

substantially identical economic terms, except for notional, as the relevant 

Eligible FCM SwapClear Compression Contracts and (2) will be registered on 

the FCM Clearing Member’s own behalf or on behalf of the FCM Client in 

whose name(s) such FCM SwapClear Contracts were registered prior to the 

compression of such FCM SwapClear Contracts.

(vi) The Clearing House shall determine (in its sole discretion) whether Eligible 

FCM SwapClear Compression Contracts that are the subject of a request for 

compression or decompression from the FCM Clearing Member may be 

compressed or decompression, as the case may be, and, if such Eligible FCM 

SwapClear Compression Contracts are compressed or decompression, the 

Clearing House shall determine the resulting terms of the FCM SwapClear 

Contract(s) (if any) that replaces the compressed or decompression Eligible 

FCM SwapClear Compression Contracts, as the case may be. Such 

determination shall be binding on the FCM Clearing Member, absent manifest 

error. It is a condition for compression or decompression of Eligible FCM 

SwapClear Compression Contracts that the amount of Margin that the Clearing 

House requires in respect of the original Eligible FCM SwapClear Compression 
FCM Regulations

- 147 -

JuneDecember 20232

Contracts is equal to that which is required by the Clearing House in respect of 

the replacement FCM SwapClear Contract(s).

Following the compression or decompression of Eligible FCM SwapClear 

Compression Contracts pursuant to the Regulation 46(n), and in the event that 

the Clearing House considers in its sole discretion that the post-compression 

FCM SwapClear Contracts have a “small notional amount,” then the Clearing 

House may, upon written request by the relevant FCM Clearing Member, effect 

the termination of the FCM SwapClear Contract(s) with a small notional 

amount. By making a request to terminate FCM SwapClear Contracts in 

accordance with this Regulation 46(n), the relevant FCM Clearing Member 

shall be deemed to represent and warrant that: (i) such termination, if effected, 

will be in accordance with Applicable Law; and (ii) it consents to the 

termination of the relevant FCM SwapClear Contracts.

(vii) In addition to the foregoing, the Clearing House may, from time to time in its 

absolute discretion, make available, in accordance with this FCM Regulation 

46, Multilateral Compression on the basis of an Multilateral Compression Cycle 

which is either:

(viii)(vii) an ACSP Compression Cycle, available to FCM Clearing Members 

and/or applicable non-FCM Clearing Members (each, a “Compression 

Clearing Member”)., and either on their own behalf or on behalf of an 

Authorised Compression Client); or

( ) a Member Compression Cycle, where so requested by two or more 

Compression Clearing Members and agreed to by the Clearing House. 

(x)(viii) In participating in any Multilateral Compression Cycle, a Compression 

Clearing Member:

(A) must be party to relevant Compression Documentation with the Clearing 

House and/or any nominated ACSP at such time as is contemplated in 

the Compression Documentation and from such time up to and including 

the Compression Time for that Multilateral Compression Cycle and at 

all relevant times must be accepted by the Clearing House and/or any 

nominated ACSP as an entity eligible to participate in such Multilateral 

Compression Cycle;

(B) in relation to an ACSP Compression Cycle, shall nominate those FCM 

SwapClear Contracts that it wishes to make available for Multilateral 

Compression in accordance with the relevant Compression 

Documentation;

(C) in relation to a Member Compression Cycle, shall together with the other 

requesting Compression Clearing Members, provide to the Clearing 

House details of the proposed Terminating FCM SwapClear Contracts 

and, where the Member Compression Cycle also includes the 

registration of Post-Multilateral Compression Contracts, details of those 

FCM SwapClear Contracts (in such form as the Clearing House may 
FCM Regulations

- 148 -

JuneDecember 20232

require from time to time) which shall, subject to the Clearing House’s 

confirmation, constitute the Compression Proposal;

(D)(C) warrants and represents to the Clearing House that the terms of its 

participation in the proposed Multilateral Compression Cycle are in 

compliance with Applicable Law; 

(E)(D) agrees and acknowledges that the Multilateral Compression Cycle will 

operate, and Multilateral Compression shall take place, in accordance 

with this FCM Regulation 46, the relevant Compression Proposal as 

accepted by such Compression Clearing Member, relevant Compression 

Documentation and such other processes and procedures as may be 

notified by the Clearing House from time to time; and

(F)(E) warrants and represents that, in the event that if it provides or receives 

instructions to or from the Clearing House or to or from the ACSP on 

behalf of an Authorised Compression Client and in connection with a 

Multilateral Compression Cycle, that it is authorised to provide or 

receive such instructions on behalf of such Authorised Compression 

Client.

(xi)(ix)Multilateral Compression for an Authorised Compression Client is subject to 

such Authorised Compression Client providing the Clearing House all such 

documents as required by the Clearing House in its sole discretion.

(xii)(x)Where the Clearing House intends to run an ACSP Compression Cycle, it shall 

nominate an ACSP to facilitate such ACSP Compression Cycle and produce the 

Compression Proposal. Such ACSP shall notify Compression Clearing 

Members meeting the criteria at (viii)(A) above of the timing and procedure for 

such ACSP Compression Cycle and invite such Compression Clearing 

Members to confirm their interest, either on their own behalf or on behalf of an 

Authorised Compression Client (where applicable). The Compression 

Documentation for such Multilateral Compression Cycle shall include any 

documentation relevant to that ACSP. Additional information on the 

administrative procedures for any Multilateral Compression Cycle may be 

included in the Compression Documentation or other procedures published by 

the Clearing House or a nominated ACSP from time to time or in connection 

with a particular Multilateral Compression Cycle.

(xiii)(xi) In any Multilateral Compression Cycle, Multilateral Compression shall 

only take place in accordance with the terms of a Compression Proposal which 

has been established and accepted by all participating Compression Clearing 

Members, in accordance with this FCM Regulation 46 and/or Regulation 56 of 

the UK General Regulations, as applicable (either on their own behalf or on 

behalf of an Authorised Compression Client, where applicable). 

Notwithstanding the other provisions of this FCM Regulation 46, the Clearing 

House shall determine (in its sole discretion) whether FCM SwapClear 

Contracts proposed for inclusion in a Compression Proposal may be so 

included.

(xiv)(xii) A Compression Proposal shall:
FCM Regulations

- 149 -

JuneDecember 20232

(A) in relation to an ACSP Compression Cycle, be generated by the 

nominated ACSP in accordance with the relevant Compression 

Documentation and details submitted to the ACSP by participating 

Compression Clearing Members (either on its own behalf or on behalf 

of an Authorised Compression Client) and be communicated by the 

ACSP to each participating Compression Clearing Member (either on 

its own behalf or on behalf of an Authorised Compression Client) in the 

manner contemplated in the relevant Compression Documentation for 

acceptance; and

(B) in relation to a Member Compression Cycle, be constituted by the details 

submitted to the Clearing House by the requesting Compression 

Clearing Members (subject to the Clearing House’s determination that 

such proposed details are eligible for Multilateral Compression), and 

shall form the basis for the subsequent acceptance by each requesting 

Compression Clearing Member; and

(C)(B) in all cases include only those FCM SwapClear Contracts that are 

eligible for Multilateral Compression in the relevant Multilateral 

Compression Cycle.

(xv)(xiii) Where it wishes to participate in a Multilateral Compression Cycle, each 

participating Compression Clearing Member shall confirm its acceptance of a 

Compression Proposal in the manner and by the time specified by the Clearing 

House or otherwise contemplated in the relevant Compression Documentation. 

In relation to an ACSP Compression Cycle, each participating Compression 

Clearing Member agrees and acknowledges that the ACSP’s confirmation to the 

Clearing House that such Compression Clearing Member has confirmed its 

acceptance of the Compression Proposal, either on its own behalf or on behalf 

of an Authorised Compression Client, to the ACSP shall constitute a binding 

acceptance by such Compression Clearing Member to the Clearing House for 

the purposes of this FCM Regulation 46. Upon a Compression Clearing 

Member’s acceptance of a Compression Proposal in accordance with this 

paragraph, either on its own behalf or on behalf of an Authorised Compression 

Client, such Compression Clearing Member shall be irrevocably bound to the 

terms of that Compression Proposal and the Multilateral Compression 

contemplated thereunder.

(xvi)(xiv) The Clearing House may require margin, subsequent to a Compression 

Clearing Member’s acceptance of a Compression Proposal but prior to the 

Compression Time, in connection with the Multilateral Compression Cycle and 

the Compression Clearing Member’s positions thereunder.

(xvii)(xv) Each Compression Clearing Member that confirms its acceptance of a 

Compression Proposal in accordance with relevant Compression 

Documentation agrees and acknowledges for the benefit of the Clearing House 

that, by its acceptance, such Compression Clearing Member:

(A) shall be bound by and act in accordance with the terms of this FCM 

Regulation 46, the Compression Documentation and any notifications 

made by the Clearing House or any nominated ACSP pursuant thereto;
FCM Regulations

- 150 -

JuneDecember 20232

(B) shall meet any margin calls from the Clearing House made prior to the 

Compression Time, and shall pay to the Clearing House any amounts 

that have become due and payable to the Clearing House at or prior to 

the Compression Time, in connection with the Multilateral Compression 

Cycle. Any such margin will be called, and any such amounts shall be 

paid, in accordance with the FCM Procedures; and

(C) is bound by the terms of the Compression Proposal and the terminations 

and, where applicable, registrations of FCM SwapClear Contracts 

comprised therein.

(xviii)(xvi) Following acceptance of the Compression Proposal by all participating 

Compression Clearing Members, the Clearing House shall effect such 

Multilateral Compression at such time as it may determine. For the avoidance 

of doubt, the irrevocable acceptance of a Compression Proposal by participating 

Compression Clearing Members shall not bind or require the Clearing House to 

proceed with a Multilateral Compression Cycle. At any time prior to the 

Compression Time, the Clearing House may, in its sole and absolute discretion, 

decide not to proceed with a Multilateral Compression Cycle.

(xix)(xvii) Without prejudice to the rights of the Clearing House set out in 

paragraph (xvi) above, a Compression Proposal shall be rejected by the Clearing 

House if:

(A) a Compression Clearing Member that has accepted a Compression 

Proposal is not eligible to participate in the relevant Multilateral 

Compression Cycle;

(B) any of the FCM SwapClear Contracts included as a Post-Multilateral 

Compression Contract or a Terminating SwapClear Contract are not 

eligible for such Multilateral Compression Cycle;

(C) in relation to a Member Compression Cycle, the proposals submitted by 

the relevant Compression Clearing Members do not match; 

(D)(C) any Compression Clearing Member due to participate in a Multilateral 

Compression Cycle rejects the Compression Proposal or does not 

provide the margin, or make any other payments, as required by the 

Clearing House (a “Rejecting Compression Clearing Member”); or

(E)(D) a Compression Clearing Member has provided or accepted instruction 

in respect of an FCM Client that is not an Authorised Compression 

Client.

(xx)(xviii) When the Clearing House effects a Multilateral Compression, it shall 

terminate all Terminating FCM SwapClear Contracts and, where the 

Multilateral Compression includes the registration of Post-Multilateral 

Compression Contracts, simultaneously with and contingent upon the 

termination of such Terminating FCM SwapClear Contracts, shall register the 

Post-Multilateral Compression Contracts in the name of the relevant 

Compression Clearing Members (either in their respective Proprietary Account 
FCM Regulations

- 151 -

JuneDecember 20232

or FCM Client Sub-Account, as applicable). The Clearing House shall notify 

the participating Compression Clearing Members once the Multilateral 

Compression has been effected. Compression Clearing Members are 

responsible for providing notifications to Authorised Compression Clients.

(xxi)(xix) Unless otherwise stated in the relevant Compression Documentation, the 

Clearing House shall have no involvement in and accepts no responsibility or 

liability in relation to any Multilateral Compression-related balancing, 

termination or ancillary payments or fees that participating Compression 

Clearing Members (or Authorised Compression Clients) may agree between 

themselves in accordance with relevant Compression Documentation or 

otherwise. In the event the Clearing House agrees to participate in the 

processing of ancillary payments or fees pursuant to the relevant Compression 

Documentation, the Clearing House accepts no liability to any Compression 

Clearing Member, FCM Client or third party in connection with or related to 

the processing of such ancillary payments or fees.

(xxii)(xx) Without prejudice to any other provisions of these FCM Regulations, in 

particular FCM Regulation 37, or any Compression Documentation, neither the 

Clearing House nor any other member of LCH Group shall have any liability 

whatsoever to any Compression Clearing Member or to any other person 

(including any FCM Client) in contract, tort (including, without limitation, 

negligence), trust, as a fiduciary or under any other cause of action in respect of 

any damages, losses, costs or expenses of whatsoever nature suffered or 

incurred by a Compression Clearing Member or any other person (including any 

FCM Client), as the case may be, as a result of:

(A) as a result of any action the Clearing House takes under this Regulation 

46, whether in accordance with a Compression Proposal, in reliance on 

information provided by Compression Clearing Member or any ACSP 

or otherwise;otherwise; or

(B) in relation to an ACSP Compression Cycle, as a result of any action or 

omission of an ACSP, including, without limitation, any error or 

omission in the terms of any Compression Proposal.; or

( ) in relation to any Multilateral Compression Cycle, as a result of any 

action or omission of a participating Compression Clearing Member, 

including, without limitation, any error or omission in the terms of any 

Compression Proposal.

(xxiv)(xxi) An ACSP’s liability in respect of its acts or omissions is subject to the 

relevant terms of the applicable Compression Documentation.

(xxv)(xxii) Any notification or communication required in connection with a 

Multilateral Compression Cycle shall be made in accordance with the 

Compression Documentation or, if not specified in the Compression 

Documentation, the FCM Procedures or such other guidance as the Clearing 

House may provide from time to time.
FCM Regulations

- 152 -

JuneDecember 20232

(xxvi)(xxiii) Notwithstanding any other provision of these Regulations or the terms 

of the FCM SwapClear Contracts, the Clearing House may disclose details of 

any Compression Proposal and related details of Compression Clearing 

Members and Authorised Compression Clients to any ACSP or otherwise as the 

Clearing House considers appropriate in order to facilitate a Multilateral 

Compression Cycle.

(xxvii)(xxiv) Where an FCM Clearing Member is a Rejecting Compression Clearing 

Member with respect to a Multilateral Compression Cycle on behalf of one or 

more of its Authorised Compression Clients, the Clearing House may, in its sole 

discretion, prevent such FCM Clearing Member from participating in future 

Multilateral Compression Cycles with respect to its FCM Client Sub-Account 

unless or until the Clearing House considers such FCM Client Sub-Account 

operationally capable of doing so, in its sole discretion.

(o) SwapClear Accounts. All FCM Omnibus SwapClear Client Accounts with LCH shall 

not be permitted to contain any FCM Contracts other than FCM SwapClear Contracts 

or to reflect any Margin other than in connection with FCM SwapClear Contracts.

(p) Unallocated FCM SwapClear Transactions. In accordance with all other applicable 

provisions of the FCM Rulebook, an FCM Clearing Member may register an FCM 

SwapClear Contract subject to post-registration allocation on behalf of a Pre-Allocation 

Executing Party in accordance with the following provisions:

(i) In order for a FCM SwapClear Transaction executed by a Pre-Allocation 

Executing Party and to be subject to post-registration allocation (such 

transaction, an “Unallocated FCM SwapClear Transaction”), the FCM 

Clearing Member that will be registering the Unallocated FCM SwapClear 

Transaction (such FCM Clearing Member, a “Pre-Allocation FCM Clearing 

Member”) must have notified the Clearing House that it wishes to establish a 

FCM SwapClear Suspension Sub-Account with respect to that Pre-Allocation 

Executing Party and the Clearing House shall have opened such FCM 

SwapClear Suspension Sub-Account for the FCM Clearing Member.

(ii) The FCM SwapClear Contract registered on behalf of a Pre-Allocation 

Executing Party that results from an Unallocated FCM SwapClear Transaction 

(an “Unallocated FCM SwapClear Contract”) shall be registered in the FCM 

SwapClear Suspension Sub-Account. The beneficial owner of the Unallocated 

FCM SwapClear Contract shall be the unidentified FCM Client on whose behalf 

the Unallocated FCM SwapClear Transaction was executed.

(iii) In order to allocate an Unallocated FCM SwapClear Transaction, a PreAllocation Executing Party or Pre-Allocation FCM Clearing Member must 

provide the Clearing House with one or more Allocation Notices. Each 

Allocation Notice shall be delivered to the Clearing House via an FCM 

Approved Trade Source System, the SwapClear API or such other means as 

notified by the Clearing House. FCM Clearing Members agree that FCM Clients 

may provide Allocation Notices to the Clearing House on their behalf via the

SwapClear Portal.
CORPORATE

Appendix III

Section 2C (SwapClear Clearing Service) of the LCH Procedures 

Changed Pages
CORPORATE

LCH LIMITED

PROCEDURES SECTION 2C

SWAPCLEAR CLEARING SERVICE
Clearing House Procedures SwapClear 

Service 

LCH Limited © 2023 - i - April June 2023

CONTENTS

Section Page

1. Swapclear Clearing Service...............................................................................................3

1.1 The Clearing Process.............................................................................................3

1.2 Operating Times and Calendars............................................................................6

1.3 Registration ...........................................................................................................6

1.4 Proprietary Accounts and Client Accounts.........................................................20

1.5 Position Accounts................................................................................................21

1.6 Other Accounts....................................................................................................23

1.7 Variation Margin and NPV Payments.................................................................24

1.8 Coupon Payments................................................................................................28

1.9 Initial Margin.......................................................................................................31

1.10 Tenor Basis Risk Margin Add-on .......................................................................33

1.11 Intra-Day Margin Call: Collateral Management ................................................33

1.12 Price Alignment Interest (PAI) and Price Alignment Amount Rate ...................33

1.13 Transfer of SwapClear Contracts between Client Accounts and Proprietary 

Accounts..............................................................................................................34

1.14 Indirect Clearing..................................................................................................35

1.15 Portfolio Transfers (BAU)...................................................................................37

1.16 Compression........................................................................................................45

1.17 Intentionally left blankDuo Compression ...........................................................47

1.18 Amendment of Trade References........................................................................49

1.19 Trade Reference Amendment Request Form ......................................................49

1.20 Custodial Segregated Accounts...........................................................................50

1.21 SwapClear STM Contracts and SwapClear CTM Contracts – Elections and 

Conversions.........................................................................................................50

1.22 SwapClear Client Clearing..................................................................................50

1.23 Tax Documents – Non-cash Collateral ...............................................................51

1.24 Early Termination Events....................................................................................51

1.25 Termination of SwapClear Dealer Status............................................................51

1.26 Payment of Stamp Tax ........................................................................................52

1.27 Section 168, Finance Act 1994............................................................................52

1.28 Default Management ...........................................................................................53

1.29 Provision of Tax Forms; Withholding Taxes; Sales Tax ....................................64

1.30 Approved Compression Services Providers........................................................64

1.31 Provision of Market Data ....................................................................................65
Clearing House Procedures SwapClear 

Service 

LCH Limited © 2023 - 44 - April June 2023

equal to the value of the Relevant Portion immediately prior to 

the reduction referred to in (i) immediately above.

1.15.9 Verification and Reliance

(a) Subject to paragraph (b) below, but otherwise notwithstanding 

anything to the contrary in the Regulations or these Procedures, in 

making any Transfer Request in accordance with Regulation 60 

(Transfer) and this Section 1.15 and (where applicable) any relevant 

Collateral Management Agreement, the Clearing House shall be 

authorised and entitled to rely conclusively on the instructions of, and 

information provided by, the Receiving Clearing Member and the 

Carrying Clearing Member, which shall be solely responsible for all 

such instructions and information.

(b) The Clearing House shall verify that the Transferring SwapClear 

Contracts identified to it by a Receiving Clearing Member as being the 

subject of such Transfer Request correspond to SwapClear Contracts 

which, according to its records, are registered in the Transfer Account 

of the Carrying Clearing Member on behalf of the Eligible Transferor. 

In the event that the Clearing House identifies a discrepancy, it will 

notify the Receiving Clearing Member and the Carrying Clearing 

Member and no transfer will occur until such time as the Transferring 

SwapClear Contracts identified to the Clearing House can be verified 

to the Clearing House.

1.15.10 Intra-Clearing Member Transfers

In connection with any Permitted Transfer of Transferring SwapClear Contracts 

where the Transfer Account of the Eligible Transferor and the Transfer Account 

of the Eligible Transferee are held by the same SCM (i.e., where the same SCM 

serves as both the Carrying Clearing Member and the Receiving Clearing 

Member), such SCM shall be deemed to make the following agreements, 

acknowledgements and representations:

(a) the contractual terms of the Transferring SwapClear Contracts will not 

change solely as a result of the Clearing House effecting the Permitted 

Transfer;

(b) the SCM will remain liable to the Clearing House for all obligations 

under the Transferring SwapClear Contracts prior to, during and after 

the Permitted Transfer;

(c) the Clearing House may require that certain changes be made to the 

books and records of one of more Approved Trade Source Systems in 

order to reflect the Permitted Transfer;

(d) the Clearing House is acting solely upon the SCM’s instructions as 

detailed to the Clearing House in writing and in reliance on the 

SwapClear Clearing Member’s agreements and representations 

(including as set out in this Section 1.15.10) in connection therewith;
Clearing House Procedures SwapClear 

Service 

LCH Limited © 2023 - 45 - April June 2023

(e) the Permitted Transfer is permissible under Applicable Law and is not 

in violation of Applicable Law, and the SCM has obtained any and all 

necessary and appropriate consents, authorisations and approvals, and 

has taken any other actions required under Applicable Law in 

connection with the Permitted Transfer; and

(f) the Clearing House shall not be liable for any costs, expenses, damages 

or losses, whether direct or indirect, suffered by any of the parties 

hereto, or by the Eligible Transferor or Eligible Transferee, as a result 

of any actions taken by the Clearing House in connection with the

Permitted Transfer.

1.15.11 Fees

Any Permitted Transfer effected pursuant to Regulation 60 and in accordance 

with these Procedures and (where applicable) any relevant Collateral 

Management Agreement will be subject to such fees as are established by the 

Clearing House from time to time in its sole and absolute discretion, and notified 

to SwapClear Clearing Members via a member circular.

1.16 Compression

A SwapClear Clearing Member may compress or decompress Eligible SwapClear

Compression Contracts in accordance with Regulation 56 and this Section 1.16. 

SwapClear Clearing Members may request the compression or decompression of 

Eligible SwapClear Compression Contracts as follows:

(a) a SwapClear Clearing Member can request that all Eligible SwapClear 

Compression Contracts entered into (i) on behalf of a designated 

SwapClear Clearing Client (or, where relevant, in respect of an Indirect 

Gross Sub-Account) or (ii) on such SwapClear Clearing Member’s 

own behalf be considered for compression by the Clearing House. Such 

a request shall be reconsidered by the Clearing House automatically 

each day (and the results notified to the SwapClear Clearing Member 

after the applicable scheduled compression run) until the SwapClear 

Clearing Member notifies the Clearing House to discontinue the

compression of its Eligible SwapClear Compression Contracts;

(b) a SwapClear Clearing Member may notify the Clearing House through 

the ClearLink API or SwapClear Portal specifying the Eligible 

SwapClear Compression Contracts it wishes to be compressed;

(c) a SwapClear Clearing Member may notify the Clearing House through 

any Approved Trade Source System previously approved for this 

purpose by the Clearing House, but only where the compression is by 

way of netting in respect of Eligible SwapClear Compression Contracts

in respect of which the position of the SwapClear Clearing Member 

(on its own behalf or on behalf of the relevant SwapClear Clearing 

Client or, where relevant, in respect of an Indirect Gross Sub-Account) 

is (x) in the opposite direction on each leg of such pair (i.e. obligations 

to make payment netted against rights to receive payment), such that 
Clearing House Procedures SwapClear 

Service 

LCH Limited © 2023 - 46 - April June 2023

the SwapClear Contract that replaces such pair of Eligible SwapClear 

Compression Contracts to be compressed shall have a notional amount 

equal to the net notional amount of the original pair of SwapClear 

Contracts or (y) in the same direction on each leg of such pair (i.e. 

obligations to make payment aggregated and rights to receive payment 

aggregated), such that the SwapClear Contract that replaces the 

compressed Eligible SwapClear Compression Contracts shall have a 

notional amount equal to the total notional amount of the original pair 

of Eligible SwapClear Compression Contracts. The SwapClear 

Clearing Member will be notified after the applicable scheduled 

compression run whether compression has occurred and the Clearing 

House will not automatically reconsider such compression request on 

subsequent days regardless of whether compression has occurred; or

(d) a SwapClear Clearing Member may request that certain Eligible 

SwapClear Compression Contracts be decompressed in the manner and 

form as determined by the Clearing House from time to time (such 

requests may be subject to the Clearing House’s capacity constraints).

In order to compress an Eligible SwapClear Compression Contracts, a SwapClear 

Clearing Member must have in its applicable Client Account or Proprietary Account 

SwapClear Contracts with the same compression identifier (being an identifier applied 

by the Clearing House that indicates that such SwapClear Contracts are eligible for 

compression) and shall then follow the process for compression as set out above. By 

making a request to compress or decompress Eligible SwapClear Compression 

Contracts, the relevant SwapClear Clearing Member shall be deemed to represent and 

warrant that its request is in compliance with Applicable Law. 

In respect of each compression run (which, for the purposes of this Section 1.16, shall 

include the time at which the Clearing House effects the decompression of Eligible 

SwapClear Compression Contracts, as applicable), the Clearing House will notify 

SwapClear Clearing Members of the cut-off time by which SwapClear Clearing 

Members must notify the Clearing House of the requested Eligible SwapClear 

Compression Contracts to be compressed in order for such Eligible SwapClear 

Compression Contracts to be included in the relevant compression run. The Clearing 

House shall process the compression of all Eligible SwapClear Compression Contracts 

notified to it prior to such cut-off time. A notification received after the relevant cut-off 

time shall be treated as if such notification was submitted on the following day. The 

Clearing House shall notify the applicable SwapClear Clearing Member after the 

relevant compression run of the result of such compression procedure. A SwapClear 

Clearing Member may, with the prior approval of the Clearing House and pursuant to 

Section 1.32, elect to receive such notification via any Approved Trade Source System 

previously approved by the Clearing House for such purpose.

A SwapClear Clearing Member that elects to provide notices or reports to the Clearing 

House through any Approved Trade Source System specifying which Eligible 

SwapClear Compression Contracts should be compressed, have been compressed or 

any other information in relation to compressions acknowledges and agrees that (i) the 

Clearing House makes no warranty (and will accept no liability) as to the effectiveness, 

efficiency, performance or any other aspect of the services provided by any Approved 

Trade Source System or the timeliness or otherwise of the delivery of any compression-
Clearing House Procedures SwapClear 

Service 

LCH Limited © 2023 - 47 - April June 2023

related details by that Approved Trade Source System to the Clearing House of the 

SwapClear Clearing Member, (ii) the Clearing House will process and use any 

compression-related information provided to it via an Approved Trade Source System 

on an “as is” basis (with no obligation to verify any details), (iii) the Clearing House 

accepts no liability for any error within or corruption of any data sent by an Approved 

Trade Source System to the Clearing House or to the SwapClear Clearing Member or 

any delay in or failure of the transmission of such data to the Clearing House or the 

SwapClear Clearing Member. In the event that the Clearing House terminates, registers 

or otherwise effects an action in connection with a compression relating to any 

SwapClear Contract on the basis of incorrect or corrupted data sent to it by an Approved 

Trade Source System, the SwapClear Clearing Member concerned shall be bound by 

the results of such actions. Such matters form part of the relationship between the 

SwapClear Clearing Member and the relevant Approved Trade Source System. 

Notwithstanding anything in this Section 1.16 of the Procedures, the Clearing House 

records in relation to any compression and the status of any SwapClear Contract prior 

to, during or following a compression run shall be the definitive record in connection 

therewith and shall prevail over any such records maintained by any Approved Trade 

Source System.

Following the compression or decompression process described above and as further 

set out in Regulation 56, the applicable SwapClear Clearing Member shall promptly 

notify the Clearing House if it believes that any errors have occurred in the compression 

process or decompression process or if its books and records do not reconcile with those 

of the Clearing House in respect of the compressed or decompressed SwapClear 

Contracts as notified to the SwapClear Clearing Member by the Clearing House.

For purposes of this Section 1.16, (i) a Clearing Client or FCM Client may, on behalf

of a SwapClear Clearing Member, submit a compression request (whether under 

paragraph (a) or (b) above) or an election to provide notices or reports via an Approved 

Trade Source System, the ClearLink API or SwapClear Portal and (ii) for the avoidance 

of doubt, references to an Approved Trade Source System may include the SwapClear 

Portal, in each case as applicable.

1.17 [Intentionally left blank]Duo Compression

The Clearing House may, in its sole and absolute discretion, from time to time make 

available Multilateral Compression on the basis of a Member Compression Cycle to 

two SwapClear Clearing Members (upon approval to participate in Multilateral 

Compression, each such SwapClear Clearing Member, a Compression Clearing 

Member).

From time to time, the Clearing House may publish an anonymised report to each 

Compression Clearing Member participating in Duo Compression identifying 

compression and risk replacement opportunities based on eligible SwapClear Contracts 

(the “Clearing House Compression Proposal”). Upon receipt of a given Clearing 

House Compression Proposal, a Compression Clearing Member may submit a request 

to the Clearing House to perform a Member Compression Cycle with another 

Compression Clearing Member. If both Compression Clearing Members consent to 

participate in a given Member Compression Cycle, the Clearing House may identify 
Clearing House Procedures SwapClear 

Service 

LCH Limited © 2023 - 48 - April June 2023

each Compression Clearing Member to the other participating Compression Clearing 

Member.

Upon consenting to participate in a given Member Compression Cycle, each 

Compression Clearing Member must provide to the Clearing House a set of SwapClear 

Contracts from the Clearing House Compression Proposal to be included in the given 

Member Compression Cycle; such SwapClear Contracts may not be included in any 

other Bulk Event until the termination or completion of the relevant Member 

Compression Cycle. 

Upon receipt from each Compression Clearing Member in the relevant Member 

Compression Cycle of the SwapClear Contracts to be included in the Member 

Compression Cycle, the Clearing House may publish to each Compression Clearing 

Member a set of proposed Terminating SwapClear Contracts (which may be SwapClear 

CTM Contracts and/or SwapClear STM Contracts) and, if applicable, Post-Multilateral 

Compression Contracts (the “Initial Member Compression Proposal”).

Each Compression Clearing Member in the relevant Member Compression Cycle must 

review and agree on a set of Terminating SwapClear Contracts and, if applicable, PostMultilateral Compression Contracts from the Initial Member Compression Proposal. 

For the avoidance of doubt, the Compression Clearing Members in the relevant Member 

Compression Cycle may agree on Terminating SwapClear Contracts and, if applicable, 

Post-Multilateral Compression Contracts that were not included in the Initial Member 

Compression Proposal. In the event a Compression Clearing Member selects 

Terminating SwapClear Contracts to be included in the relevant Member Compression 

Cycle, which were not set forth on the Initial Member Compression Proposal, the 

Compression Clearing Member must submit such other Terminating SwapClear 

Contracts to the Clearing House for inclusion in the relevant Member Compression 

Cycle.

In the event both Compression Clearing Members in the relevant Member Compression 

Cycle agree on a matching set of Terminating SwapClear Contracts and, if applicable, 

Post-Multilateral Compression Contracts, including any Terminating SwapClear 

Contracts that were set forth on the Initial Member Compression Proposal (each

Compression Clearing Member’s Post-Multilateral Compression Contracts must be 

equal and offsetting with the other relevant Compression Clearing Member’s PostMultilateral Compression Contracts), the Clearing House may present to each 

Compression Clearing Member a proposed final set of Terminating SwapClear 

Contracts and, if applicable, Post-Multilateral Compression Contracts for the given 

Member Compression Cycle (the “Final Member Compression Proposal”). Upon 

approval from each Compression Clearing Member of the Final Member Compression 

Proposal, such Final Member Compression Proposal shall constitute the Compression 

Proposal for the given Member Compression Cycle and the Clearing House may effect 

the Member Compression Cycle as set forth in Regulation 56 in its sole and absolute 

discretion.

SwapClear Clearing Members should contact swapclear.clientservices@lch.com for 

further information.
Clearing House Procedures SwapClear 

Service 

LCH Limited © 2023 - 63 - April June 2023

(B) a Merged DMA, to each DMA that was combined to 

form such Merged DMA, pro rata according to the PreMerger TMR Ratio of each such DMA (where the 

amount attributed to each such DMA is an “Interim 

Amount”). 

(iii) If the Clearing House attributes an Interim Amount to a DMA 

under subparagraph (ii)(B) above, then it will further attribute 

such Interim Amount as follows: 

(A) Where the DMA to which the Interim Amount was 

attributed is an Initial DMA, the Clearing House will 

further attribute such amount to each Affected NonPorting Client Account referable to such Initial DMA, 

pro rata according to the Pre-Default TMR Ratio of each 

such Affected Non-Porting Client Account; and 

(B) Where the DMA to which the Interim Amount was 

attributed is a Merged DMA, the Clearing House will 

further attribute such amount to each DMA that was 

combined to form such Merged DMA, pro rata according 

to the Pre-Merger TMR Ratio of each such DMA.

(iv) If the Clearing House attributes an amount to a DMA under 

subparagraph (iii)(B) above, then it will further attribute such 

amount according to the method specified in subparagraph (iii) 

(treating such amount as an Interim Amount for the purposes of 

subparagraph (iii)) until all amounts are attributed to NonPorting Client Accounts. 

(f) Attribution of Auction Results 

The Clearing House shall attribute the Auction Result, in respect of the 

sale of an Auction Portfolio, to each Affected Non-Porting Client 

Account referable to the Final DMA from which such Auction Portfolio 

was formed, pro rata according to the Pre-Default TMR Ratio of each 

such Affected Non-Porting Client Account. 

(g) Collateral 

The Clearing House shall hold the relevant Collateral in respect of each 

Non-Porting Client Account in its applicable Client Account until the 

process described in this Section 1.28.9 has been completed.

1.28.10 Rates Service Default Management Disclosure Notice

Each SCM must ensure that each Clearing Client is provided with, or is directed 

to a copy of, the Rates Service Default Management Disclosure Notice and 

further must provide confirmation to the Clearing House, in the form and 

manner reasonably required by the Clearing House, that it has discharged this 

obligation in respect of each of its Clearing Clients.
CORPORATE

Appendix IV

LCH FCM Procedures 

Changed Pages
FCM PROCEDURES OF THE CLEARING HOUSE

LCH LIMITED
FCM Procedures FCM SwapClear

LCH Limited © 2023 - 40 - June 2023

reconsider such compression request on subsequent days 

regardless of whether compression has occurred; or

(D) an FCM Clearing Member may request that certain Eligible 

FCM SwapClear Compression Contracts be decompressed in 

the manner and form as determined by the Clearing House from 

time to time (such requests may be subject to the Clearing 

House’s capacity constraints).

Any request for the Clearing House to approve an FCM Approved 

Trade Source System for the purposes of this Section 2.1.11(a) must be 

made in writing and using the Clearing House’s standard 

documentation. Through making a request, an FCM Clearing Member 

is deemed to represent and warrant that the individual making the 

request is appropriately authorized to do so.

(b) In order to compress an Eligible FCM SwapClear Compression 

Contracts, an FCM Clearing Member must have in its applicable 

FCM Client Sub-Account or Proprietary Account two or more FCM 

SwapClear Contracts with the same compression identifier (being an 

identifier applied by the Clearing House that indicates that such 

FCM SwapClear Contracts are eligible for compression) and shall 

then follow the process for compression as set out above. By 

making a request to compress or decompress Eligible FCM 

SwapClear Compression Contracts, the relevant FCM Clearing 

Member shall be deemed to represent and warrant that its request is 

in compliance with Applicable Law.

(c) In respect of each compression run (which, for the purposes of this 

Section 2.1.11, shall include the time at which the Clearing House 

effects the decompression of Eligible FCM SwapClear Compression 

Contracts, as applicable), the Clearing House will notify Clearing 

Members of the cut-off time by which the FCM Clearing Members 

must notify the Clearing House of the requested Eligible FCM 

SwapClear Compression Contracts to be compressed in order for 

such Eligible FCM SwapClear Compression Contracts to be 

included in the relevant compression run. The Clearing House shall 

process the compression of all Eligible FCM SwapClear 

Compression Contracts notified to it prior such cut-off time. A 

notification received after the relevant cut-off time shall be treated 

as if such notification was submitted on the following day. The 

Clearing House shall notify the applicable FCM Clearing Member 

after the relevant compression run of the result of such compression 

procedure. An FCM Clearing Member may, with the prior approval 

of the Clearing House and pursuant to the Procedures, elect to 

receive such notification via any FCM Approved Trade Source 

System previously approved by the Clearing House for such 

purpose.

Any request for the Clearing House to approve an FCM Approved 

Trade Source System for the purposes of this Section 2.1.11(c) must be