RepoClear LTD

Risk Management

RepoClear has a robust and proven risk and default management framework

Our Risk Management Philosophy

RepoClear’s risk management aims to ensure that any Clearing Member default can be handled within the existing resources and with minimal disruption to the market.

In order to best maintain the safety and stability of Clearing Members, the service has built a framework of safeguards, underpinned by robust risk models.

The various layers of protection are intended to ensure that we have adequate financial resources to protect trades which are cleared at LCH and the collateral posted against them.

Safety and Stability: Risk Management at RepoClear

Risk management and settlement is at the core of everything we do at here at RepoClear.

It starts with the onboarding process where we verify that a new Clearing Member has the capabilities to participate in the market and to risk manage their positions.

That philosophy then runs through every step of the clearing process at LCH, all the way to the settlement of a Clearing Member default.

Membership Criteria

As our first line of defence, RepoClear sets stringent and transparent eligibility requirements for prospective Clearing Members.

The Margin Framework

LCH has a comprehensive framework for determining initial and variation margin requirements.

Initial margin requirements are calculated to cover the risks and costs associated with the close-out of a defaulted Clearing Member’s positions, while variation margin requirements are calculated to meet the daily mark-to-market movements in the value of a Clearing Member’s positions.  

Default Fund

Following a Clearing Member’s default, our default waterfall model dictates that the Clearing Member's posted margin and default fund contributions are the first resources to be utilised. Only after these resources are exhausted across all services and LCH’s own ‘skin-in-the-game’ is applied, would non-defaulting Clearing Members begin to experience losses.

Below, we go into more detail as to how we would manage a Clearing Member default.

Contact us

If you'd like to know more about how we can help you, please get in touch.

Email the RepoClear Ltd team