Approved Compression Service Providers (ACSPs)

SwapClear can receive and process valid compression proposals created by Approved Compression Service Providers (as defined in the applicable LCH rulebook).

Below is a list of the Approved Compression Service Providers for SwapClear:

 - TriOptima AB

 - Quantile Technologies Limited

 - Capitalab, a division of BGC Brokers L.P.

LCH requires all prospective compression providers meet the following criteria:

  • Meets the requirements to provide Multilateral Compression in accordance with LCH's rulebook
  • Potential ACSP has robust legal framework under which to provide such compression services
  • Potential ACSP can demonstrate robust controls and operational capability
  • LCH can operationally support the proposed compression services  
  • Potential ACSP has written confirmation of commitment from at least six SwapClear clearing members to use their compression services
  • Potential ACSP can demonstrate successful testing of its compression services with a minimum number of potential participants
ACSP Onboarding Steps

Minimum Onboarding Steps

  • Having a suitable NDA in place for discussion on prospective ACSP's proposed compression services
  • Validation by LCH that the above minimum criteria have been met
  • Established with LCH an ACSP compression documentation under which such service will operate along with LCH Rulebook
  • Established a service agreement with LCH on which to operate and any agreed legal and commercial arrangements
  • Successfully complete testing phases required by LCH
  • LCH's receipt of all risk and regulatory approvals required to onboard the prospective ACSP

The anticipated duration from once the criteria set forth above has been met is between three to six months, dependent on the ACSP's ability to satisfying the criteria above.

ACSP Membership Choice

Once the prospective ACSP has satisfied the above criteria, it may elect a Silver or Gold membership.  ACSPs will be required to pay a once-off onboarding fee of £75,000 to cover LCH’s costs to support its compression services and the operational, legal and sales efforts to onboard the ACSP.

Where an ACSP’s compression cycles have terminated at least 1,000,000 trades sides in a given calendar year, that ACSP is eligible to apply for Platinum ACSP status, as described below.  In the event a Platinum ACSP does not maintain the minimum number of terminations required for Platinum status in a given calendar year, LCH will retroactively charge the ACSP the applicable membership applicable fees for Gold membership.  Choice of applicable membership can be elected annually from 1st November to 15 December each year. In the event an ACSP does not elect a membership plan by 15 December, the ACSP will be deemed to have elected a dormant membership plan.

 

 

  Commercial Model for ACSP Silver Gold Platinum
1 Once-off onboarding Fee (required for all new ACSPs) £75,000 £75,000 NA
2 Annual ACSP Fee (refunded if the ACSP terminates 1,000,000 trade sides within the calendar year) £200,000 £480,000 NA
3 Compression Runs included in Annual ACSP Fee (subjected to member demand and operational constraints – no refunds if unused) 8 24 Subjected to member demand
4 Average cost per run included in annual fee £25,000 £20,000 NA
5 Charge for additional compression runs (above inclusion) in EUR, USD or GBP.  Additional runs will not incur this charge if they terminate at least 15,000 EUR or USD trade sides or at least 8,000 GBP trade sides £22,500 £18,000 NA
6 Charge for a EUR or USD compression run that terminates fewer than 15,000 trades sides or a GBP compression run that terminates fewer than 8,000 trade sides N/A N/A £18,000

7

Min Participants in EUR, USD, GBP, JPY compression runs 8 8 8
8 Min Participants in others currency specific runs 6 6 6
9 Platinum qualification – min. number of trade side terminations from ACSP compression runs per calendar year based on previous 12 months NA NA 1,000,000
10 If Platinum ACSP does not meet minimum trade side terminations target, then ACSP must revert to Gold status      

 

The terms of an ACSP’s appointment as such by LCH, including all fees, costs, expenses, minimum criteria and membership terms shall be subject to and governed by the relevant service agreement with LCH.

Note, LCH charges its clearing members and clients for using LCH ACSP compression services.  These are described here.

LCH’s process for confirming proposed ACSP’s cycles
  1. For the next quarter all vendors submit to LCH requests for runs including the date they want to perform a run and its currency[s]

    1. A vendor can only do one run a day

  2. Vendors all submit their requests by email on the same pre agreed day

  • For Q1 – Second Wednesday of preceding November

  • For Q2 – Second Wednesday of preceding February

  • For Q3 – Second Wednesday of preceding May

  • For Q4 – Second Wednesday of preceding August
     

  1. LCH collates all the requested runs and identifies those which LCH cannot support, these being

    1. Runs on days that LCH is not open

    2. Runs on days that LCH believe is sensitive eg elections

    3. Runs on days when LCH may be making a release

    4. Others to be determined at LCHs discretion

  2. LCH collates the remaining eligible requested runs and identifies where there are conflicts with the LCH’s operational constraints, these being

    1. Cannot have a USD and EUR on the same day

    2. Cannot have two USD runs on the same day

    3. Cannot have two EUR runs on the same day

    4. Can have a maximum of two AM currencies (other than USD, CAD, MXN) a day

    5. Can have a maximum of two PM currencies (USD, CAD, MXN) a day

  3. When runs are identified as breaching LCH operational constraints (4 above)

    1. LCH will request each affected vendor to supply the members which have expressed an interest in participating

      1. A member being a House member, CB member, a Client

    2. Vendor[s] will be awarded run in order of the number of participants expected and where appropriate other vendor[s] will  have their requests rejected

      1. If a member is submitted by more than one vendor it will not be counted for any vendor

      2. If two or more vendors have the same number of members the gross notional in USD equivalent of the members in the currency will be used to allocate the run

      3. Periodically LCH can request a vendor to provide evidence they sought and got the members intent that they submitted

  4. LCH will revert to each vendor confirming what runs they have been allocated by  the close of the Wednesday following the submission of their requests

  5. Vendors who have runs rejected can work with LCH to identify appropriate alternatives

  6. LCH will publish on the secure site the approved run schedule including the date, currency[s] and vendor as well as including in the RSU update following a quarters allocation

Notwithstanding the above, LCH may allocate, cancel or reschedule compression runs in its discretion for operational, technical, risk or legal considerations.