UNDERSTANDING CONCERNING SUPERVISION OF LCH.CLEARNET SA 

AMONG THE U.S. COMMODITY FUTURES TRADING COMMISSION, 

FRENCH AUTORITE DES MARCHES FINANCIERS, AND 

FRENCH AUTORITE DE CONTROLE PRUDENTIEL 

Article One: Background 

1. LCH.Clearnet SA ("LCH") has applied to the U.S. Commodity Futures Trading 

Commission ("CFTC") for registration as a Derivatives Clearing Organization ("DCO") 

in order to provide clearing and settlement services in the United States for certain credit 

default swaps ("CDS"). 

2. In connection with LCH's request for registration with the CFTC, the French Autorite des 

Marches Financiers ("AMF") and the French Autorite de ContrOle Pmdentiel ("ACP") 

(collectively "French Authorities") and the CFTC have reached this understanding 

concerning consultation, cooperation, and the exchange of information ("Understanding") 

related to LCH's functions as a DCO pursuant to the te1ms of a CFTC order granting 

registration status to LCH ("Registration Order"). This Understanding is consistent with 

the International Organization of Securities Commissions' ("IOSCO's") Principles of 

Cross-Border Supervisory Cooperation (May 2010) and does not prejudice the ability of 

the CFTC and the French Authorities to enter into a more comprehensive memorandum 

of understanding for supervisory cooperation in the future. 

3. LCH is a clearinghouse located in France and supervised by the French Authorities. 

Article Two: General Provisions 

4. Through this Understanding, the CFTC, AMF, and ACP (each an "Authority" and 

collectively "Authorities") express their willingness to consult and cooperate with each 

other in the interest of fulfilling their respective regulatory mandates, particularly in the 

areas of financial and market integrity, systemic stability, and customer protection related 

to the oversight of LCH, as permitted by, and consistent with, the laws and requirements 

that govern each Authority. 

5. This Understanding does not create any legally binding obligations, confer any rights, or 

supersede domestic laws. This Understanding does not confer upon any person the right 

or ability directly or indirectly to obtain, suppress, or exclude any infmmation or to 

challenge the execution of a request for assistance under this Understanding. 

6. This Understanding does not limit an Authority to taking solely those measures described 

herein in fulfillment of its supervisory and oversight functions. 

7. The Authorities acknowledge that, notwithstanding this Understanding, LCH remains 

fully responsible for meeting all of the te1ms of a Registration Order. If the CFTC 

detetmines to revoke LCH' s Registration Order, it will inform the French Authorities 

before notifying LCH of the revocation. 
8. This Understanding complements, but does not alter, the terms and conditions of the 

following existing arrangements that concern information sharing in the context of 

enforcement matters: (i) the Administrative Agreement between the AMF (formerly the 

Commission des Operations de Bourse) and the CFTC on cooperation and mutual 

assistance (June 6, 1990); and (ii) the IOSCO Multilateral Memorandum of 

Understanding Concerning Consultation and Cooperation and the Exchange of 

Information (May 2002) ("MMOU"), to which the CFTC and the AMF are signatories. 

9. Within the framework of this Understanding, the Authorities will provide each other with 

the fullest cooperation pe1missible under their national law in relation to the supervision 

ofLCH. 

10. To facilitate cooperation under this Understanding, each Authority hereby designates 

contact persons as set forth in appendix A. 

Article Three: Consultation, Cooperation, and Exchange of Information 

11. The Authorities recognize the importance of close communication regarding the 

supervision ofLCH and intend to consult regularly, as necessary, regarding general 

supervisory developments and issues relevant to the operations, activities, and regulation 

ofLCH. 

12. As appropriate in the particular circumstances, each Authority endeavors to infmm the 

other Authorities promptly, and where practicable in advance of: 

a. Pending regulatory changes or proposed regulatory actions with regard to LCH 

that may have a significant impact on LCH' s operations, activities, or reputation, 

including changes in default rules or procedures; 

b. Any material event that could adversely impact LCH's financial or operational 

stability including, without limitation, such events as a default or potential default 

of a clearing member or participant, market or settlement bank difficulties that 

might adversely impact LCH, LCH's failure to satisfy any ofthe terms of a 

Registration Order, and any process directed toward the revocation of a 

Registration Order or any known material changes in LCH' s operating 

environment, financial resources, operations, management, or systems and 

controls that may adversely impact its operations or financial stability; and 

c. The status of efforts to address any material difficulties that adversely could 

impact the financial or operational stability of LCH or one or more of its clearing 

members or participants. 

13. The Authorities may share infmmation not otherwise available to the Authority making 

the request ("Requesting Authority"), such as examination findings and related 

information. Requests to an Authority ("Requested Authority") generally should be 

made in writing but, in extraordinary circumstances, may be made orally provided such 

communication is confirmed in writing as promptly as possible. 

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Article Four: Access to Information in France and Permissible Uses of Such Information 

14. The CFTC has informed the French Authorities that, as a condition of a Registration 

Order, LCH must commit, among other things, that all documents, books, records, 

reports, and other infotmation ("Books and Records") related to LCH's operation as a 

DCO are subject at all times to inspection and copying by the CFTC and will be made 

available and supplied directly to the CFTC promptly in response to the CFTC's request, 

in the manner in which the CFTC requests that the Books and Records be provided. The 

CFTC will notify the French Authorities of any written requests made to LCH for nonpublic Books and Records. The CFTC routinely will communicate directly with LCH. 

15. The CFTC has informed the French Authorities and the French Authorities acknowledge 

that, as a condition of a Registration Order, LCH must obtain all consent waivers 

necessary to enable it to make its Books and Records available to the CFTC, as set fotih 

in Paragraph 14 above. 

16. The French Authorities intend to assist the CFTC in obtaining directly from LCH 

information necessary for LCH to comply with its statutory and regulatory obligations as 

aDCO. 

17. Non-public information obtained by the CFTC from LCH, in accordance with a 

Registration Order, is intended to be used for supervisory and oversight purposes only, 

including determining compliance with the laws and regulations applicable to LCH in its 

capacity as a DCO and with the te1ms of a Registration Order. Should the CFTC 

dete1mine that such information is needed for enforcement purposes, including use in an 

enforcement investigation or proceeding, the CFTC will notify the French Authorities 

and will use such information in accordance with the terms of the IOSCO MMOU. 

18. a- The Banking and Financial Lawn 2010-1249 dated 22 October 2010 authorizes LCH 

(through a specific provision dedicated to market infrastructures, which derogates from 

other legal provisions of general application, including from the French blocking statute 

and professional secrecy provisions) to supply to the CFTC and to provide the CFTC 

with direct access to information, either orally or in writing, related to LCH's clearance 

and settlement services pursuant to the terms of a Registration Order. This 

Understanding complies with the cooperation agreement requirements of Articles 1632-7 

and 1632-17 of the French Monetary and Financial Code ("MFC"), and LCH must be 

defined by decree pursuant to Article 1632-17 as the market infrastructure subject to the 

MFC prior to any issuance of a Registration Order. 

b - U.S. laws do not prohibit a DCO registered with the CFTC and based in the United 

States that also is authorized by the French Authorities to act as a clearing organization 

for French regulated markets or multilateral trading facilities to supply to the French 

Authorities and to provide the French Authorities with direct access to infotmation, either 

orally or in writing, related to the clearing organization's clearance and settlement 

services, that would be necessary to the fulfilment of the French Authorities' regulatory 

and supervisory responsibilities. 

3 
Article Five: Procedures for On-Site Visits 

19. In fulfilling its regulatory functions relating to its supervision ofLCH as a DCO, the 

CFTC will need to carry out on-site visits of LCH in France with respect to LCH' s 

operations and activities as a DCO ("On-Site Visits"). 

20. The CFTC has informed the French Authorities that, as a condition of a Registration 

Order, LCH must provide access to the CFTC for the purpose of any routine or for-cause 

regulatory On-Site Visit, including to examine the Books and Records, systems, and 

premises of LCH for the purposes of ongoing supervision and oversight. 

21. In the same way, the French Authorities have informed the CFTC that French legal 

provisions necessitate that the French Authorities initiate an on-site inspection ofLCH in 

France in order to accommodate the CFTC's On-Site Visit ofLCH. 

22. Consequently, the CFTC will provide advance notice to the French Authorities of the 

CFTC's intent to do an On-Site Visit, and will consult with the French Authorities on the 

intended timeframe and scope of the On-Site Visit. Without delay, the French 

Authorities will initiate an inspection of LCH in consultation with the CFTC so that the 

CFTC may carry out an On-Site Visit. 

23. The French Authorities intend to assist the CFTC regarding On-Site Visits, including 

cooperation and consultation in reviewing, interpreting, and analyzing the contents of 

public and non-public Books and Records, and in obtaining information from directors 

and senior management of LCH. 

24. The French Authorities will share with the CFTC any relevant examination information 

or compliance reviews they may have undetiaken with respect to LCH. 

25. The On-Site Visit may be followed by additional requests from the CFTC to LCH for 

Books and Records and by requests for remedial action by LCH in response to the 

CFTC's examination findings. 

26. The CFTC will communicate its examination findings and any requests for remedial 

action directly to LCH but will provide, solely for information purposes, an advance copy 

of any examination letter or report to the French Authorities. 

Article Six: Confidentiality 

27. Except for disclosures in accordance with this Understanding, each Authority intends to 

keep confidential to the extent permitted by law non-public information shared among the 

Authorities, requests made under this Understanding, the contents of such requests, and 

any other matters arising among the Authorities pursuant to this Understanding. 

28. The French Authorities understand that the CFTC may provide information shared under 

this Understanding to the Board of Governors ofthe Federal Reserve System and the U.S. 

Securities and Exchange Commission pursuant to the terms of the Memorandum of 

Understanding Between the Board of Governors of the Federal Reserve System, the US. 

4 
Commodity Futures Trading Commission and the US. Securities and Exchange 

Commission Regarding Central Counte1partiesjor Credit Default Swaps (November 

2008) ("CDS MOU"). Under the tenns of the CDS MOU, the authority receiving nonpublic information under the MOU will not disclose such infmmation to a third party or 

to the public withoutthe prior written consent of the providing authority. 

29. Except as provided in Paragraph 28, non-public information obtained under this 

Understanding may not be shared with any other non-signatory to this Understanding 

without the prior consent of the Requested Authority providing the non-public 

infmmation. If the Requesting Authority requests such consent: 

a. The Requesting Authority will provide confi1mation to the Requested Authority 

that the information will be subject to confidential treatment; and 

b. The Requested Authority will take into account the level of urgency of the request 

and respond in a timely manner. 

Article Seven: Termination 

30. Cooperation in accordance with this Understanding will continue until the expiration of 

30 days after: (a) either Authority gives written notice to the other Authority of its 

intention to terminate the Understanding; or (b) the CFTC dete1mines to revoke a 

Registration Order. If either Authority gives notice of termination, the parties will 

consult concerning the disposition of any pending requests. If an agreement cannot be 

reached through consultation, cooperation will continue with respect to all requests for 

assistance that were made under the Understanding before the expiration of the 30-day 

period until all requests are fulfilled or the Requesting Authority withdraws such 

request(s) for assistance. In the event of termination of this Understanding, infmmation 

obtained under this Understanding will continue to be treated in the manner described 

under Aliicles Four and Six. 

5 
Article Eight: Effective Date 

31. This Understanding will take effect upon issuance by the CFTC of a Registration Order 

related to LCH's functions as a DCO. 

This Understanding is executed in triplicate: 

Gary Gens r 

Chainna 

U.S. Co 

Jean-Piene ouyet 

Chairman 

French Autorite es Marches Financiers 

Christian N oyer 

Chairman 

French Autorite de Controle Prudentiel 

Date [fJ tt~ ~ Zo ( l 

Date l{-- J" "'~•.j Z () ll 

6 
Appendix A 

Contact Persons 

In addition to the following contact information, the CFTC, AMF, and A CP will exchange 

confidential emergency contact telephone info'rmation. 

AMF 

Pauline Leclrec-Glorieux 

Managing Director - Investment Services and Asset Management 

Autorite des marches financiers 

1 7 place de la Bourse 

75082 Paris Cedex 02 

Phone: +33.1.53.45.61.06 

Fax: +33.1.53.45.64.00 

Email: p.leclerc-glorieux@amf-france.org 

Altemate Contacts: 

Marguerite Yates 

Head of Department - Investment Services and Asset Management Division 

Autorite des marches financiers 

1 7 place de la Bourse 

75082 Paris Cedex 02 

Phone: +33.1.53.45.64.28 

Fax: +33.1.53.45.64.00 

Email: m. yates@amf-france.org 

Delphine Vandenbulcke 

Deputy head of department - Oversight of market infrastructures and safekeeping of client assets 

Autorite des marches financiers 

1 7 place de la Bourse 

75082 Paris Cedex 02 

Phone:+ 33 1 53 45 61 53 

Fax:+ 33 1 53 45 61 10 

Email: d.vandenbulke@amf-france.org 

Xavier Tessier 

Director for Intemational Affairs 

Autorite des marches financiers 

1 7 place de la Bourse 

75082 Paris Cedex 02 

Phone: +33.1.53.45.63.56 

Fax: + 33.1.53 .45 .63 .50 

Email: x.tessier@amf-france.org 

7 
ACP 

Frederic Visnovsky 

Directeur du Controle des etablissements mutualistes et des Entreprises d'Investissement 

Autorite de Contr6le Prudentiel 

61, Rue Taitbout 

75009 Paris 

Phone: +33 1 42.92.59.53 

Fax: +33 1 42.92.58.00 

Email: frederic. visnovsky@acp. banque-france.fr 

Alternate Contacts: 

Patrick Amis 

Directeur-adjoint du Controle des etablissements mutualistes et des Entreprises d'Investissement 

Autorite de Contr6le Prudentiel 

61, Rue Taitbout 

75009 Paris 

Phone: +33 1 42.92.41.53 

Email: patrick.amis@acp. banque-france.fr 

Eric Brouste 

Chef du Service des Entreprises d'Investissement 

Autorite de Controle Prudentiel -

61, Rue Taitbout 

75009 Paris 

Phone: +33 1 42.92.57.52 

Email: eric.brouste@acp. banque-france.fr 

CFTC 

Ananda Radhakrishnan 

Director, Division of Clearing and Intermediary Oversight 

Commodity Futures Trading Commission 

1155 21 51 Street, N.W. 

Washington, DC 20581 

Phone: 202-418-5188 

Fax: 202-418-5547 

Email: aradhakrishnan@cftc.gov 

Alternate Contacts: 

John C. Lawton 

Deputy Director, Division of Clearing and Intermediary Oversight 

Commodity Futures Trading Commission 

8 
1155 21st Street, N.W. 

Washington, DC 20581 

Phone: 202-418-5480 

Email: jlawton@cftc.gov 

Robert B. Wasse1man 

Associate Director, Division of Clearing and Intermediary Oversight 

Commodity Futures Trading Commission 

1155 21st Street, N.W. 

Washington, DC 20581 

Phone:202-418-5092 

Email: nyasserman@cftc.gov 

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