SIX x-clear Ltd and LCH.Clearnet Limited (LCH.Clearnet), have today published the complete documentation which covers the existing interoperability arrangement between the clearing houses.
This arrangement currently serves the London Stock Exchange (LSE) and SIX Swiss Exchange.
There has been significant interest in the arrangement from both financial institutions and trading venues. The full inter-CCP contract has been published to support the market‟s understanding of interoperability. Based upon a proven model which successfully withstood the Lehman default, the document includes:
Integrity of risk management:
Each CCP retains the authority to determine the eligibility of trades for clearing.
Margining process preserves the integrity and safeguards of each CCP.
Protection from contagion in the event of a default:
„Defaulter pays‟ model ensures protection for non-defaulting CCP and its members.
Distinct default funds minimises contagion in the event of a CCP default.
Urs Wieland, Member of the Executive Committee of SIX x-clear, commented: "The publication of this document is another step in listening and delivering what our clients request. Co-operation and transparency are the way forward in interoperability and we will continue to work with LCH.Clearnet Ltd. to promote and lead this initiative in Europe."
Wayne Eagle, Director of Equity Services, LCH.Clearnet, commented: "Publishing the full document provides a greater degree of transparency which will promote understanding of the clearing links between LCH.Clearnet and SIX x-clear and how the risk is managed. Together with SIX x-clear we have led the way with clearing house interoperability for a number of years and continue to advocate competitive clearing across the European equities market."
Further information: ccp.sisclear.com/ccp/about/about-publications.htm