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Company Circular No:

LCH.Clearnet LTD Circular No 3455

Date:07 April 2014
To:All LCH.Clearnet Members (excluding FCMs)

Security Deed Arrangements under EMIR

LCH.Clearnet Limitedís (LCH.Clearnet) EMIR-compliant client account offering requires new Security Deed documentation for Members in certain jurisdictions. The new Security Deed is not required for all Members as some jurisdictions have implemented legislation that renders the Security Deed superfluous. England and Wales is one such jurisdiction.

Members who are domiciled in the following countries must execute the new Security Deed:

If this Security Deed is not executed by a Member, collateral delivered to LCH.Clearnet by that Member in respect of its client positions will be returned to the Member in the event of the default of that Member. Certain account types will not be available to the Clients of that Member and porting of Client positions on a default of that Member will not be possible.

The requirement to execute the Security Deed is necessary for all Members of LCH.Clearnet in the jurisdictions listed above, and includes existing SwapClear Members who have already entered into either a Security Trustee Deed of Assignment or one or more Tripartite Deeds of Assignment.

Instructions for execution of the Security Deed are attached in the Annex below.

A link to the template Security Deed is here.

For more information on the account offerings available from LCH.Clearnet please see this page: http://www.lchclearnet.com/about_us/corporate_governance/account_structures_under_emir.asp

As part of LCH.Clearnet Limitedís EMIR authorisation project, we have commissioned legal opinions in respect of each jurisdiction in which we have Members. Drafts of these opinions will be made available to Members via our Secure Area

https://www.lchclearnet.com/secure_area/register.asp?area=41

The draft of the English law opinion, together with several others, are currently available. The remaining draft opinions will be added in due course. The opinions are made available to Members on a non-reliance basis and are currently in draft form and are therefore subject to possible change. Once these opinions are finalised and signed, they will be made available on LCH.Cís website.

Queries relating to legal matters should be directed to either farid.anvari@lchclearnet.com or james.christie@lchclearnet.com.
           

Annex: Security Deed Execution Instructions

When executing the Security Deed for the first time (such Security Deed being the "Original Security Deed"), Members must list in Schedule 2 of the Security Deed all the Clients they have at that time.

If the Member wishes to on-board further Clients after it has executed the Original Security Deed, it will have to execute a further Security Deed in respect of those further Clients. A further Security Deed will need to be executed each time further Clients are on-boarded. Each further Security Deed is referred to in this guidance as an "Additional Security Deed".

Each Additional Security Deed has an Annex in which Members should list all those Clients to which the Additional Security Deed relates. The form of Additional Security Deed is found in Schedule 3 to the Original Security Deed.