LCH & MiFID II/MiFIR
LCH is firmly committed to delivering the benefits of MiFID II and to working closely with our customers and trading partners to ensure their readiness for implementation. This webpage has been created to keep you informed of our approach to delivering MiFID II and MiFIR changes across LCH. We will keep this page updated but encourage you to check with the relevant business entity, or with your relationship manager, for specific updates.
The STP provisions impose strict timeframes on trading venues, investment firms and CCPs in relation to derivatives trades which are submitted to clearing, both OTC and exchange-traded transactions.
They must have in place effective systems, procedures and arrangements to ensure that transactions in cleared derivatives are submitted and accepted for clearing as quickly as technologically possible using automated systems.
CCPs (as well as trading venues and clearing members) are subject to the STP timeframe requirements in respect of cleared derivatives traded on a trading venue except where some requirements are satisfied, notably where the rules of the CCP provide that the cleared derivative transaction is cleared automatically and immediately, with the clearing member becoming the counterparty to the CCP.
If these requirements are not satisfied, the STP timelines will need to be complied with. In this respect, MiFIR requires CCPs to accept or reject clearing of a transaction within 10 seconds of receiving the transaction or receiving the receipt of a clearing member’s acceptance or non-acceptance, in the case of transactions executed on a bilateral basis. LCH is reviewing the transaction workflows to ensure these timeframes are met, where applicable.
The provisions on indirect clearing deal with the protection of indirect clients further down the clearing chain, i.e. clients that have a contractual relationship with a direct client of a clearing member.
MiFIR has developed and enhanced the original EMIR requirements on indirect clearing. CCPs are now required to offer two types of indirect client account models as well as meeting requirements around default management and porting. LCH will be offering account structures compliant with MiFID II requirements.
More information on indirect account structure is available at this link
We welcome Open Access requirements which are central to how LCH operates and indeed is a measure LCH has advocated for some time.
LCH will enhance processes and agreements to meet requirements defined by MiFIR. Additional information on the overall LSE Group approach to Open Access is available at the following link.
This webpage does not, and does not purport to, contain a detailed description of any aspect of MiFID II, MiFIR or any other topics discussed in this webpage, and it has not been prepared for any specific person. This document does not, and does not seek to, constitute advice of any nature. You may not rely upon the contents of this document under any circumstance and should seek your own independent legal, investment, tax and other advice. LCH’s implementation of changes related to MiFID II and MiFIR remain subject to regulatory approval and are subject to change.