SA Acceptable Securities

At LCH SA, Clearing Members and their clients are able to post debt securities issued by high quality sovereign government issuers and certain government agencies to meet initial margin obligations.

LCH SA accepts three forms of non-cash margin:

  1. Securities collateral: deposited via Full Title Transfer Accounts opened by LCH in various Central Securities Depositories (CSDs)

  2. Central Bank Guarantee offers provided by the National Belgium Bank (NBB) or Dutch National Bank (DNB)

  3. CDSClear Pledge Solution: enables CDSClear members to enter into a collateral arrangement whereby it deposits eligible collateral via a Single Pledgor Pledged Account (SPPA) opened by LCH SA in Euroclear Bank

 

Securities Collateral Haircuts

All securities posted as collateral are subject to “haircuts”. The size of the haircut is influenced by the tenor of the bond pledged. Haircuts are typically smaller for bonds with shorter maturities and higher for securities with longer tenors.

For the most up-to-date information on RepoClear, Cash Equities, Listed Derivatives & CDSClear haircuts, please log into the CaLRM secure area.

Collateral Rules and Regulations

Looking for more detailed information on the regulations regarding posting collateral at LCH SA? The links below provide a deeper dive on all matters concerning pledging margin on our clearing services.

View the section of the LCH SA Rulebook concerning posting collateral at our securities, derivatives and fixed income clearing services

View the CDSClear clearing procedures

Security Enquiry

Unsure whether a security is eligible as initial margin collateral at LCH SA?

Securities Collateral - Essential Details

Collateral Operating Procedure

Equities, Listed Derivatives & Fixed Income

For non-cash collateral:

1 – Lodge of securities:

11- On D-1, CMS Instruction is sent at 16:00 CET to LCH SA;

12- On D, the member instructs (Franco or Sell Free of payment) in the relating CSD for matching against LCH SA instruction;

13– On D, if settlement occurs before 12:00 PM CET and if cash return requested in CMS instruction by the member, the excess cash balance, available after the reception of the new non-cash collateral, is paid back to the member between 12:00 and 13:00 PM CET.

14– For all settlements occurring after 12:00 PM CET, the cash restitution is done on D+1 only, through the initial margin call (8:30-9:00 AM CET).

2 – Release of securities:

21– On D-1, CMS Instruction is sent at 16:00 CET to LCH SA;

22– On D, the Initial margin call calculation run excluding the requested collateral and the member is called for the relating amount in euro cash in TARGET2 system (8:30-9:00 AM CET);

23 – On D, after confirmation of member’s margin call payment (9:00 AM CET), LCH SA releases its instruction (Sell free of payment) for matching in the relating CSD.

3 – Linked trades (same day deposit and release):

31– Member links its release (in the CMS instruction) to the settlement of a new lodge; the release is only taken into account by LCH SA after the confirmation of the settlement of the linked lodge and without any additional cash to call.

32 – When the linked lodge is not executed before 12:00 PM CET, both instructions (lodge and release) are systematically rejected in CMS by LCH SA.

For further information, please contact collateral.ops.fr@lch.com.

CDSClear

Please read the Collateral Movements Procedure.  For any further questions, please contact either collateral.ops.fr@lch.com or CDSClear@lch.com.

You can find the CDSClear Collateral Movements Procedure here

Collateral Account Segregation under EMIR

More technical information on the holding and processing of collateral under the various segregated account structures available to LCH SA Clearing Members and their clients can be found in this helpful document.