Become a Member at LCH Ltd
LCH Ltd is our UK-registered clearing house.
Among the clearing services that sit within the LCH Ltd corporate structure are SwapClear, EquityClear, ForexClear, RepoClear and our Listed Derivatives clearing offering.
LCH Ltd’s Clearing Membership is a large and diverse community. Among LCH Ltd’s membership are some of the largest and most sophisticated banks and broker dealers operating in global derivatives markets today.
Learn more about the eligibility requirements to begin clearing at LCH Ltd and our criteria for becoming a Clearing Member.
You’ll also find information on the costs of membership, details on the application process, the technical specifications for connecting and your responsibilities regarding the default fund.
Membership Criteria
Minimum acceptance criteria for Clearing Members includes:
- Minimum levels of net capital: Procedures -Section 1 of the Rulebook
- Appropriate banking arrangements: Procedures -Section 3 of the Rulebook
- Staff of sufficient experience and knowledge of the products being cleared
- Appropriate systems to manage their clearing activities
For full Clearing Member status criteria, refer to the Procedures -Section 1 of the Rulebook.
For FCM applicants refer to regulation 4 of the Rulebook - FCM Rulebook.
All applicants for Clearing Member status must sign binding legal agreements with LCH.
All applicants are required to have the appropriate exchange memberships in place where applicable.
Costs
Application fee of £10,000 (+ VAT for UK applicants).
View more on service applicable fees.
Initial Review
Enquiries regarding Clearing Member status should be directed to LCH's Onboarding Team who will be able to confirm whether the enquirer meets the minimum criteria for such status. Enquirers are requested to provide the following:
- the most recent annual financial statements along with any interim statements that show the current financial position
- details of any implicit or explicit support available from group or external entities
Following receipt of this information LCH will carry out an initial review; this review considers factors such as external market data, the country of incorporation, financial position and any support arrangements in place.
Completion of Application Document
Following confirmation that the enquirer meets the minimum criteria, the application process is initiated by completing the Application for Clearing Member Status form and returning it with the accompanying documentation listed.
In addition applicants are required to sign the Clearing Membership Agreement along with other documentation dependent on the market(s) applied for and any relevant KYC/AML documentation.
Due Diligence Visit
The application process for new Clearing Members may include a due diligence visit at the applicant's offices.
The purpose of this meeting is to discuss corporate structure and strategy; the scope of the new Clearing Member's business generally and clearing activities specifically (planned and current); financials; regulation; operational processes; banking facilities, and risk management (of clients and any proprietary business, margining, credit management policy, stress testing, etc.)
Executive Risk Committee Approval
Following the due diligence visit if required, Clearing Member applications will be reviewed and approved by the LCH Executive Risk Committee.
Implementation (Connectivity/Testing)
The Member Connectivity team will contact you separately regarding technology/connectivity requirements. Once you have successfully connected, the relevant Relationship Manager will contact you to arrange testing (if applicable).
Banking
A UK & US PPS mandate along with a Banking preference form is required to be completed for each service prior to go-live. In addition each Member must have PPS Contingency arrangements in place and will be required to complete a Contingency Payment Arrangements Form. Members will also be required to sign a Collateral Management Access Agreement.
Training
LCH requirements state that at least two personnel are fully conversant with clearing procedures, and detailed training will be provided free of charge for all new Clearing Members.
Please send any queries relating to Member Training to centralonboarding@lch.com
Default Fund Contribution
EquityClear Default Fund
EquityClear Clearing Members must contribute to the Equities Default Fund.
The Equities minimum contribution is £500,000.
Rates Default Fund
- The per member Listed Interest Rates minimum default fund contribution is the greater of (i) an amount based on stress loss over initial margin and (ii) £2mn; and
- The overall Listed Interest Rates default fund amount across all Listed Rates and Joint Rates members is 10mn.
Should the sum of member level required contributions in (1) above be lower than 10mn, all members’ contributions will be increased pro-rata such that the overall Listed Rates default fund amount meets the required 10mn minimum.
RepoClear Default Fund
RepoClear Clearing Members must contribute to the RepoClear Default Fund. The RepoClear minimum contribution is £2,000,000.
RepoClear Contributions (as defined in the Default Rules) are payable in GBP (as outlined in Section 2B.11.1 of the Rulebook).
ForexClear Default Fund
ForexClear Clearing Members must contribute to the ForexClear Default Fund. The ForexClear minimum contribution is $5,000,000.
Payment of Initial Contributions
Initial contributions will be called from the applicant’s relevant House PPS account one business day prior to go-live.
All contributions are recalculated monthly.
Go-Live
Successful applicants will agree a go-live date with LCH, by which time all requirements will have been met.
Timescales
Once a full and complete application pack has been received at LCH, the approval process will take approximately eight weeks.
Ongoing KYC/AML Requirements
Once live as a Clearing Member you will be responsible for keeping us up to date with any changes to your organisation. Clearing Members will be required to provide certain KYC/AML documentation at least annually or upon request. Clearing Members will be granted access to an online tool where contacts, roles and organisation changes can be updated directly and any required documentation can be uploaded.
Legal implications
It is important that clearing members familiarise themselves with the legal implications associated with these ISA and OSA accounts. LCH Ltd has produced disclosure for the purposes of Article 39(7) of Regulation (EU) No. 648/2012 (EMIR) as effective in the EU (EU EMIR) and retained in the UK under the European Union (Withdrawal) Act 2018 (UK EMIR), and Regulation 34(2)(a) of the FSMA 2000 (Recognition Requirements, etc) Regulations 2001 which can be accessed by clicking on the links below.
Legal Implications - Account Arrangements (Article 39.7 disclosure)
Legal Implications - Account Arrangements (Article 39.7 disclosure - FCM business)
These disclosure statements include links to jurisdictional legal opinions which form part of such disclosure. These legal opinions are also available within the jurisdictional legal opinions heading above and contain details of the main legal implications of the respective levels of segregation offered including information on the insolvency law applicable in the relevant jurisdictions (including, but not limited to, information on how the default rules interact with applicable local insolvency laws).
View more about LCH Ltd Rulebook.
Jurisdictional Risk Disclosure
The following risk disclosure notice must be provided by all clearing members that clear for clients through the SwapClear, ForexClear services to clients that are incorporated in Singapore or operate through a Singaporean branch.
Rates Service Default Management Disclosure
The following disclosure notice must be provided by all clearing members to each clearing client, and all clearing members must provide confirmation to the Clearing House that it has discharged this obligation with respect to each of its clearing clients.
Resignations
Clearing Members may resign giving not less than three months’ notice.
Please contact the Onboarding Team on +44 (0)20 7426 7949 or by email to centralonboarding@lch.com for further information.
Contact us
For further information please contact the Central Onboarding Team on:
+44 (0)20 7426 7949
Or by email to centralonboarding@lch.com