LCH Ltd EquityClear Pending trade limit process for OTC trades

Report date
Summary

Circular No.

LCH Circular No 3915

Service Circular No.

EquityClear Circular No 75

Date

8th December 2017

To:

All LCH Ltd EquityClear Members

Body

Dear Member

In our continuing efforts to provide leading risk management standards and processes, LCH Ltd would like to inform you that the following process is in place to ensure, risks are reduced when trades breach the limits set below for OTC trades.

  • ADV check: nb shares > 50% of 30-day ADV and consideration >£1m
  • Price check: (Trade price versus last validated price) = difference x nb shares > £700k
  • Absolute consideration: trade >£50mn
  • If any of the above are breached, LCH Ltd will assess the trade for margin impact.

LCH Ltd will assess the portfolio impact of the trade. If the portfolio impact is to increase the members’ Total Margin liability by greater than 5% late in the day (post 4.30pm), LCH Ltd will reject the trade.

However, LCH Ltd will take into consideration any excess collateral the member may have on its account.

If you require further information, please contact either:

Tim Beckwith Tel: + 44 (0) 207 426 7276 Email: tim.beckwith@lch.com or
Ian Mackenzie Tel: + 44 (0) 207 426 7265 Email: ian.mackenzie@lch.com

LCH Ltd, EquityClear.