Clearing Members of LCH Ltd (LCH) are major financial groups (including the majority of major investment banks), broker-dealers, and specialist commodity houses. To be eligible for membership at LCH Ltd, firms must meet certain minimum net capital requirements depending on the products to be cleared. LCH Ltd Clearing Members are of a high credit quality and have large financial resources.
Please use the headings below to obtain further information regarding the minimum acceptance criteria and application process for Clearing Members.
Minimum acceptance criteria for Clearing Members includes:
minimum levels of net capital: Procedures -Section 1 of the Rulebook;
appropriate banking arrangements: Procedures Section 3 of the Rulebook;
staff of sufficient experience and knowledge of the products being cleared;
appropriate systems to manage their clearing activities;
For full Clearing Member status criteria, refer to the Procedures -Section 1 of the Rulebook.
For SwapClear FCM applicants refer to regulation 4 of the Rulebook - FCM Rulebook.
All applicants for Clearing Member status must sign binding legal agreements with LCH Ltd.
All applicants are required to have the appropriate exchange memberships in place.
Application fee of £1,500.00 (+ VAT for UK applicants).
Enquiries regarding Clearing Member status should be directed to LCH Ltd's Onboarding and Static Data Team who will be able to confirm whether the enquirer meets the minimum criteria for such status. Enquirers are requested to provide the following:
Following receipt of this information LCH Ltd will carry out an initial review; this review considers factors such as external market data, the country of incorporation, financial position and any support arrangements in place.
Completion of Application Documentation
Due Diligence Visit
The application process for new Clearing Members may include a due diligence visit at the applicant's offices. The purpose of this meeting is to discuss corporate structure and strategy; the scope of the new Clearing Member's business generally and clearing activities specifically (planned and current); financials; regulation; operational processes; banking facilities, and risk management (of clients and any proprietary business, margining, credit management policy, stress testing, etc.)
Executive Risk Committee Approval
Following the due diligence visit, Clearing Member applications will be reviewed and approved by the LCH Ltd Executive Risk Committee.
The Member Connectivity team will contact you separately regarding technology/connectivity requirements. Once you have successfully connected, the relevant Client Relationship Manager will contact you to arrange testing (if applicable).
LCH Ltd requirements state that at least two personnel are fully conversant with clearing procedures, and detailed training will be provided free of charge for all new Clearing Members. For further details of training, please refer to the Training Curriculum. Please send any queries relating to Member Training to Onboarding@lch.com or email@example.com
Default Fund Contribution
LCH EnClear Clearing Members must contribute to a Default Fund for Commodities Business.
The Commodities minimum contribution is $750,000.
EquityClear and LSE Derivatives Clearing Members must contribute to a Default Fund for Equities Business.
The Equities minimum contribution is £500,000.
Listed Interest Rate Business
Curve Clearing Members must contribute to a Default Fund for Listed Interest Rate Business.
The Listed Interest Rate minimum contribution is £500,000.
RepoClear Clearing Members must contribute to a Default Fund for RepoClear Business. The RepoClear minimum contribution is £2,500,000. RepoClear Contributions (as defined in the Default Fund Rules) may be payable in either EUR or GBP (as outlined in Section 2B.11.1 of the Rulebook).
SwapClear Clearing Members must contribute to a Default Fund for SwapClear Business. The SwapClear minimum contribution is £10,000,000 plus a minimum of £3,000,000 in respect of the SwapClear Tolerance Contribution Amount.
ForexClear Clearing Members must contribute to a Default Fund for ForexClear Business.
The ForexClear minimum contribution is $5,000,000.
Payment of Initial Contributions
Initial contributions will be called from the applicants relevant House PPS account one business day prior to go-live.
All contributions are recalculated monthly.
Default Fund Rules
For further details please refer to the Default Rules which can be found here.
Successful applicants will agree a go-live date with LCH Ltd, by which time all requirements will have been met.
Once a full and complete application pack has been received at LCH Ltd, the approval process will take approximately eight weeks.
Clearing Members may resign giving not less than three months notice, although LCH Ltd (LCH) will be flexible insofar as it is possible to accommodate a reduced period of notice. Please contact the Onboarding and Static Data Team on +44 (0)20 7426 7949 or by email to firstname.lastname@example.org for further information.