LCH Ltd U.S. sanctions notice

Report date

Circular No.

LCH Circular No 4133


8th January 2021


All LCH Ltd EquityClear Clearing Members


Dear Clearing Member,



U.S. Sanctions

On 12 November 2020, President Trump issued this executive order: “Executive Order 13959 on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies” (the “Executive Order”). Subsequently, the Office of Foreign Assets Control (“OFAC”) issued guidance as to the interpretation of the Executive Order, including the list of 35 sanctioned Chinese companies (the “OFAC Guidance”) (each such company, a “Chinese Sanctioned Company”).  


In summary, the effect of the Executive Order and OFAC Guidance is that, on and from 11 January 2021, U.S. persons are prohibited from engaging in certain transactions in:


  1. the securities of any Chinese Sanctioned Company; and
  2. securities that are derivative of, or provide investment exposure to, such securities (e.g. an ETF tracking an index which includes the securities of one or more Chinese Sanctioned Companies) (collectively, the “U.S. Sanctions”).



Applicable Law and Contractual Obligations


EquityClear clearing members of LCH Limited (“LCH”) (each, an “ECM”) are reminded:


  1. to act in accordance with any applicable limitations or obligations arising under U.S. law, as a result of the Executive Order, OFAC Guidance and any subsequent guidance OFAC may issue; and
  2. of their contractual obligations under General Regulation 48(c) and (d) of the LCH rulebook, including that an ECM must perform its obligations, and exercise its rights, under the LCH rulebook in accordance with applicable law (including, as to an ECM’s settlement obligations under EquityClear cleared contracts). LCH rulebook:


In this regard, LCH is not a U.S. person for the purposes of the Executive Order.    



U.S. Sanctions – Possible Changes


Please note that LCH continues to monitor the U.S. Sanctions closely and may take additional action, as appropriate. ECMs should be aware of the evolving nature of the U.S. Sanctions and act accordingly.


Yours Sincerely


Alex Krunic, Head of Equities LCH Ltd