Approved Compression Service Providers (ACSPs)
SwapClear can receive and process valid compression proposals created by Approved Compression Service Providers (as defined in the applicable LCH rulebook).
Below is a list of the Approved Compression Service Providers for SwapClear:
- TriOptima AB
- Quantile Technologies Limited
- Capitalab, a division of BGC Brokers L.P.
LCH requires all prospective compression providers meet the following criteria:
- Meets the requirements to provide Multilateral Compression in accordance with LCH's rulebook
- Potential ACSP has robust legal framework under which to provide such compression services
- Potential ACSP can demonstrate robust controls and operational capability
- LCH can operationally support the proposed compression services
- Potential ACSP has written confirmation of commitment from at least six SwapClear clearing members to use their compression services
- Potential ACSP can demonstrate successful testing of its compression services with a minimum number of potential participants
Minimum Onboarding Steps
- Having a suitable NDA in place for discussion on prospective ACSP's proposed compression services
- Validation by LCH that the above minimum criteria have been met
- Established with LCH an ACSP compression documentation under which such service will operate along with LCH Rulebook
- Established a service agreement with LCH on which to operate and any agreed legal and commercial arrangements
- Successfully complete testing phases required by LCH
- LCH's receipt of all risk and regulatory approvals required to onboard the prospective ACSP
The anticipated duration from once the criteria set forth above has been met is between three to six months, dependent on the ACSP's ability to satisfying the criteria above.
Once the prospective ACSP has satisfied the above criteria, it may elect a Silver or Gold membership. ACSPs will be required to pay a once-off onboarding fee of £75,000 to cover LCH’s costs to support its compression services and the operational, legal and sales efforts to onboard the ACSP.
Where an ACSP’s compression cycles have terminated at least 1,000,000 trades sides in a given calendar year, that ACSP is eligible to apply for Platinum ACSP status, as described below. In the event a Platinum ACSP does not maintain the minimum number of terminations required for Platinum status in a given calendar year, LCH will retroactively charge the ACSP the applicable membership applicable fees for Gold membership. Choice of applicable membership can be elected annually from 1st November to 15 December each year. In the event an ACSP does not elect a membership plan by 15 December, the ACSP will be deemed to have elected a dormant membership plan.
|Commercial Model for ACSP||Silver||Gold||Platinum|
|1||Once-off onboarding Fee (required for all new ACSPs)||£75,000||£75,000||NA|
|2||Annual ACSP Fee (refunded if the ACSP terminates 1,000,000 trade sides within the calendar year)||£200,000||£480,000||NA|
|3||Compression Runs included in Annual ACSP Fee (subjected to member demand and operational constraints – no refunds if unused)||8||24||Subjected to member demand|
|4||Average cost per run included in annual fee||£25,000||£20,000||NA|
|5||Charge for additional compression runs (above inclusion) in EUR, USD or GBP. Additional runs will not incur this charge if they terminate at least 15,000 EUR or USD trade sides or at least 8,000 GBP trade sides||£22,500||£18,000||NA|
|6||Charge for a EUR or USD compression run that terminates fewer than 15,000 trades sides or a GBP compression run that terminates fewer than 8,000 trade sides||N/A||N/A||£18,000|
|Min Participants in EUR, USD, GBP, JPY compression runs||8||8||8|
|8||Min Participants in others currency specific runs||6||6||6|
|9||Platinum qualification – min. number of trade side terminations from ACSP compression runs per calendar year based on previous 12 months||NA||NA||1,000,000|
|10||If Platinum ACSP does not meet minimum trade side terminations target, then ACSP must revert to Gold status|
The terms of an ACSP’s appointment as such by LCH, including all fees, costs, expenses, minimum criteria and membership terms shall be subject to and governed by the relevant service agreement with LCH.
Note, LCH charges its clearing members and clients for using LCH ACSP compression services. These are described here.
1. For the next quarter all vendors submit to LCH requests for runs including the date they want to perform a run and its currency[s]
A vendor can only do one run a day
A vendor can only perform one run in a currency per calendar week
2. Vendors all submit their requests by email on the same pre agreed day
For Q1 – Second Wednesday of preceding November
For Q2 – Second Wednesday of preceding February
For Q3 – Second Wednesday of preceding May
For Q4 – Second Wednesday of preceding August
3. LCH collates all the requested runs and identifies those which LCH cannot support, these being
Runs on days that LCH is not open
Runs on days that LCH believe is sensitive e.g. elections
Runs on days when LCH may be making a release
Others to be determined at LCHs discretion
4. LCH collates the eligible requested runs and confirms to the vendors which runs have been accepted by the following Wednesday. Acceptance and confirmation of request runs are subject to the following:
Where more than one vendor has requested to perform a run in the same currency on the same day, LCH will inform such vendors that these runs could be subject to constraints on the number of “events” (each termination and new trade is an event) they can generate in the applicable run
Impacted vendors may choose to request different dates for runs and can work with LCH to identify appropriate, alternative dates
Runs may also be subject to event constraints depending on the combinations of currencies requested
5. Where runs will be subjected to event constraints, LCH will inform the impact vendors approximately a week before the applicable run as to the number of events each vendor is permitted to perform in each of their runs
Where a vendor’s run is subject to event constraints, the number of events a vendor may effect shall be limited based on (x) the number of events effected in the vendor’s previous run(s) in the relevant currency and/or (y) the number of eligible trades each vendor has in their cycle based on the participating members. Where two or more vendors are performing runs in the same currency on the same day a member can only participate in one of the cycles
6. LCH will publish on its Secure Area the approved run schedule, including the date, currency[s] and vendor(s), and will provide such information in the next RSU that follows such run allocation. LCH will also publish this information to the vendors
Notwithstanding the above, LCH may allocate, cancel or reschedule compression runs in its discretion for operational, technical, risk or legal considerations