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Company Circular No:LCH.Clearnet Ltd Circular No 3281
Date:27 March 2013
To:All EnClear and Exchange Clearing Members

Invoicing Back: General Business

  1. LCH.Clearnet Ltd (LCH.Clearnet)  has implemented changes to the default funds for ForexClear, SwapClear and RepoClear. Each of those business lines now have in place a loss allocation method and provisions for service closure, ensuring the continued viability of LCH.Clearnet following a default.

  2. In the coming weeks we will be proposing corresponding arrangements in respect of the General Fund, with the following features:
    - loss allocation based on default fund contributions; 
    - service closure provisions; and
    - removal of access to LCH’s residual capital at the bottom of the waterfall.

  3. The changes will assist  LCH.Clearnet in complying with the proposed amendments to the recognition requirements for clearing houses (as set out in the HM Treasury Consultation Paper of January 2013).

  4. In the meantime, LCH.Clearnet is to introduce two changes (links below) to its rules in respect of General Business, relating to invoicing back:
    a. There will be greater transparency as to how invoicing back fits in the default fund waterfall in respect of general business.
    b. The price for invoicing back following a default will be set by LCH.Clearnet (rather than by the relevant exchanges).

  5. The attached rule changes will take effect tomorrow, 28 March 2013.

  6. Should you have any questions please contact your usual LCH.Clearnet representative.

Invoicing back document 1

Invoicing back document 2