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SIX x-clear and LCH.Clearnet Publish Documentation About Interoperability

The documentation supports transparency and promotes understanding of how the two clearing houses interoperate to serve the London Stock Exchange and SIX Swiss Exchange.

SIX x-clear Ltd and LCH.Clearnet Limited have published the complete documentation covering the existing interoperability arrangement between the clearing houses, according to their joint announcement. This arrangement currently serves the London Stock Exchange (LSE) and SIX Swiss Exchange.

The full inter-central clearing counterparty (CCP) contract has been published to support the market’s understanding of interoperability, according to Monday's release.

Based upon a proven model, which successfully withstood the Lehman Brothers default, the document includes:

Integrity of risk management: o Each CCP retains the authority to determine the eligibility of trades for clearing o Margining process preserves the integrity and safeguards of each CCP

Protection from contagion in the event of a default: o ‘Defaulter pays’ model ensures protection for non-defaulting CCP and its members o Distinct default funds minimizes contagion in the event of a CCP default

Urs Wieland, Member of the Executive Committee of SIX x-clear, commented, in the release: "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, the independent clearing house group serving international exchanges and platforms as well as OTC markets, stated in the release, “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.”

Six x-clear is in charge of risk management within SIX Securities Services. The company primarily acts as the central counterparty for SIX Swiss Exchange and the London Stock Exchange. Licensed as a bank under Swiss law, it also has the status of a recognized overseas clearing house in the United Kingdom

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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