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Originating department:Commercial Services
Company Circular No:LCH.Clearnet Ltd Circular No 3027
Service Circular No:SwapClear Circular No 073
Date:10 November 2011
To:All LCH.Clearnet Limited SwapClear Clearing Members and FCM Clearing Members

SwapClear FCM Model: Migration from T4 to T2 Model

LCH.Clearnet Limited (LCH.Clearnet) will be migrating from its current T4 trade booking model to a T2 trade booking model, subject to final regulatory approval. All FCM Clearing Members and those SwapClear Clearing Members that have entered into an FCM SwapClear Transaction, as such terms are defined in the FCM Rulebook, should be aware of this migration.

Currently all FCM SwapClear Transactions, upon acceptance for clearing by LCH.Clearnet, are cleared under a T4 operational model. Under this T4 model, upon clearing the following contracts are registered:

(i) one between LCH.Clearnet and a SwapClear Clearing Memberís House account;
(ii) one between LCH.Clearnet and an FCM Clearing Memberís House Account; and
(iii) two or more contracts between an FCM Clearing Memberís House account and Client account and LCH.Clearnet.

With effect from 5 December 2011, under the T2 model, contracts will not be registered between an FCM Clearing Memberís House account and Client account and, in addition, those contracts that were registered under the T4 model will be converted to T2 transactions. The migration will take place over the weekend 3rd and 4th of December 2011, with a once off report provided to members on the 5th of December for those impacted by the migration.

For most clearing members, the only impact of this conversion will be the change of trade ID within MarkitWire. However, there will be more impact for those SwapClear Clearing Members in respect of which their FCM SwapClear Transactions have been allocated to more than one FCM Client post registration by LCH.Clearnet. LCH.Clearnet will be writing to those SwapClear Clearing Members individually.

Further details of the T4 to T2 migration are available from the secure area of the member website.

For queries please contact:

Cameron Goh Cameron.goh@lchclearnet.com

Owen Taylor Owen.taylor@lchclearnet.com