SEC Approves LCH SA Expansion of Eligible Collateral to U.S. Treasury Securities
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LCH SA can expand the types of U.S. Treasury securities it accepts as collateral from clearing members and make related updates to its risk and collateral rules. The change affects firms that clear credit default swaps and related products through LCH SA’s CDSClear service. In practical terms, clearing members may have more flexibility in meeting margin and default fund requirements with U.S. Treasury collateral. Compliance, treasury, and risk teams at affected firms should review LCH SA’s updated eligible collateral list, haircut schedules, and any operational changes tied to the approval.
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Key Changes
- Allows LCH SA to accept a broader range of U.S. Treasury securities as eligible margin collateral
- Updates related collateral risk controls, including applicable limits and haircuts
- Gives CDSClear clearing members more options for meeting margin and default fund requirements
Obligations
What this law requires
Clearing members of LCH SA’s CDSClear service must provide initial margin to LCH SA to support cleared CDS and CDS option positions.
Clearing members of LCH SA’s CDSClear service must contribute to LCH SA’s default fund as part of LCH SA’s credit-risk management framework.