LCHClearnetClearnet delivery procedures
LCH.Clearnet sets down all its delivery rules and procedural requirements in its publication, 'General Regulations, Default Rules and
Procedures'. One of the key stipulations is that LCH.Clearnet procedures must be read in conjunction with the rules of the exchange. The exchange rules and administrative procedures will always take precedence in cases of conflict.
LCH.Clearnet defines its delivery procedures, some of which are common to all contracts which LCH.Clearnet clears. These address issues such as:
• Nomination of Transferors and Transferees.
• How tendered lots are to be allocated to receiving members.
• House and client accounts are always treated separately.
• Making the EDSP available on the Clearing Processing System (CPS).
• Margin remains held as both initial and VM on open contracts subject to delivery.
• The method of delivery of information which needs to be communicated to LCH.Clearnet.
• The delivery timetables.
The LCH.Clearnet has introduced a stand-alone computer system specifically for electronically communicating delivery information with its members, applicable to Euronext.liffe deliverable bond contracts only. A product called The Deliveries Package enables all Euronext.liffe bond deliveries to be automated in this way. All clearing members involved in Bund and Gilt deliveries must submit and retrieve delivery information using this system.
Users of The Deliveries Package are issued with security passwords, which are updated at every bond delivery period.
A key factor to note is that members must always be sure to meet delivery deadlines, notwithstanding the performance or failure of the electronic communication system. Therefore, LCH.Clearnet stresses that members should allow sufficient time to fulfil deadlines as laid down in the procedures. Failure to do so would constitute late delivery for which fines and other possible disciplinary actions could be imposed by the Exchange.
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