LTD Membership

The process of becoming a member at LCH Ltd

Become a Member at LCH Ltd

LCH Ltd is our UK-registered clearing house.

Among the clearing services that sit within the LCH Ltd corporate structure are SwapClear, EquityClear, ForexClear, RepoClear, CommodityClear and our Listed Derivatives clearing offering.

LCH Ltd’s Clearing Membership is a large and diverse community. Among LCH Ltd’s membership are some of the largest and most sophisticated banks and broker dealers operating in global derivatives markets today.

Learn more about the eligibility requirements to begin clearing at LCH Ltd and our criteria for becoming a Clearing Member.

You’ll also find information on the costs of membership, details on the application process, the technical specifications for connecting and your responsibilities regarding the default fund.

Membership Criteria

 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 FCM applicants refer to regulation 4 of the Rulebook - FCM Rulebook.

All applicants for Clearing Member status must sign binding legal agreements with LCH.

All applicants are required to have the appropriate exchange memberships in place where applicable.

Costs

Application fee of £15,000 (+ VAT for UK applicants).

View service applicable fees.

Initial Review

Enquiries regarding Clearing Member status should be directed to LCH's Onboarding Team who will be able to confirm whether the enquirer meets the minimum criteria for such status. Enquirers are requested to provide the following:

  • the most recent annual financial statements along with any interim statements that show the current financial position
  • details of any implicit or explicit support available from group or external entities

Following receipt of this information LCH 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 Document

Following confirmation that the enquirer meets the minimum criteria, the application process is initiated by completing the Application for Clearing Member Status form and returning it with the accompanying documentation listed.

In addition applicants are required to sign the Clearing Membership Agreement along with other documentation dependent on the market(s) applied for and any relevant KYC/AML 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 if required, Clearing Member applications will be reviewed and approved by the LCH Executive Risk Committee.

Implementation (Connectivity/Testing)

The Member Connectivity team will contact you separately regarding technology/connectivity requirements. Once you have successfully connected, the relevant Relationship Manager will contact you to arrange testing (if applicable).

Banking

The following three banking arrangement documents are required to be completed prior to go-live:

Training

LCH 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.

 

Please send any queries relating to Member Training to Onboarding@lch.com. 

Default Fund Contribution

EquityClear  Default Fund

EquityClear and LSE Derivatives Clearing Members must contribute to the Equities Default Fund.
The Equities minimum contribution is £500,000.

 

Rates Default Fund

Curve Global Clearing Members must contribute to the Rates Default Fund.
The Listed Interest Rate minimum contribution is £500,000.

SwapClear Clearing Members must contribute to the Rates Default Fund. The SwapClear minimum contribution is £10,000,000 plus a minimum of £3,000,000 in respect of the SwapClear Tolerance Contribution Amount.

 

RepoClear Default Fund

RepoClear Clearing Members must contribute to the RepoClear Default Fund. The RepoClear minimum contribution is £2,500,000.

RepoClear Contributions (as defined in the Default Rules) may be payable in either EUR or GBP (as outlined in Section 2B.11.1 of the Rulebook).

 

ForexClear Default Fund

ForexClear Clearing Members must contribute to the ForexClear Default Fund. The ForexClear minimum contribution is $5,000,000.

 

Payment of Initial Contributions

Initial contributions will be called from the applicant’s relevant House PPS account one business day prior to go-live.
All contributions are recalculated monthly.


 

Go-Live

Successful applicants will agree a go-live date with LCH, by which time all requirements will have been met.

Timescales

Once a full and complete application pack has been received at LCH, the approval process will take approximately eight weeks.

Ongoing KYC/AML Requirements

Once live as a Clearing Member you will be responsible for keeping us up to date with any changes to your organisation.  Clearing Members will be required to provide certain KYC/AML documentation at least annually or upon request.  Clearing Members will be granted access to an online tool where contacts, roles and organisation changes can be updated directly and any required documentation can be uploaded.

Legal implications

It is important  that clearing members familiarise themselves with the legal implications associated with these ISA and OSA accounts. LCH Ltd has produced disclosure for the purposes of Article 39(7) of EMIR,  and Regulation 34(2)(a)  of the FSMA 2000 (Recognition Requirements, etc) Regulations 2001 which can be accessed by clicking on the links below.

Legal Implications - Account Arrangements (Article 39.7 disclosure)

Legal Implications - Account Arrangements (Article 39.7 disclosure  - FCM business)

These disclosure statements include links to jurisdictional legal opinions which form part of such disclosure.  These legal opinions are also available within the jurisdictional legal opinions heading above and contain details of the main legal implications of the respective levels of segregation offered including information on the insolvency law applicable in the relevant jurisdictions (including, but not limited to, information on how the default rules interact with applicable local insolvency laws).

Click here to view LCH Ltd EMIR compliant Rulebook

Jurisdictional Risk Disclosure

The following risk disclosure notice must be provided by all clearing members that clear for clients through the SwapClear, ForexClear or EnClear (Freight Division) services to clients that are incorporated in Singapore or operate through a Singaporean branch.

Singapore Clearing Client Disclosure

Rates Service Default Management Disclosure

The following disclosure notice must be provided by all clearing members to each clearing client, and all clearing members must provide confirmation to the Clearing House that it has discharged this obligation with respect to each of its clearing clients.

Rates Service Default Management Disclosure

FCM Rates Service Default Management Disclosure

Resignations

Clearing Members may resign giving not less than three months’ notice, although LCH will be flexible insofar as it is possible to accommodate a reduced period of notice.

 

Please contact the Onboarding Team on +44 (0)20 7426 7949 or by email to onboarding@lch.com for further information.

Contact Us

For further information please contact the Onboarding Team on:

+44 (0)20 7426 7949

Or by email to onboarding@lch.com