How It Works

Overview

Clearing by LCH.Clearnet Ltd. for Turquoise Derivatives is performed using a combination of CC&G’s BCS Clearing Platform and LCH.Clearnet risk management and banking systems.  Transactions are matched and registered on the BCS platform, at which point valid trades are novated to LCH.Clearnet and governed by the LCH.Clearnet rulebook.

Roles and Responsibilities

The roles and responsibilities are split between Turquoise Derivatives and LCH.Clearnet.  Turquoise Derivatives are responsible for Trade Management, Position Management and the calculation of variation margin, both intraday and at end of day.  LCH.Clearnet is responsible for delivery management, default management, calculation of initial margin, and the intraday and end of day calling of margin.

Deliveries

From the close of business on exercise/expiry date until settlement, all Turquoise Derivatives delivery obligations become EquityClear contracts under the LCH.Clearnet Ltd. Rulebook.  These trades are margined and delivered through the LCH.Clearnet EquityClear service bringing benefits to members in the form of margin offsets and optional cross trade source netting.  

Margining

Turquoise Derivatives contracts are margined using London SPAN methodology on the day of and prior to the day of exercise/expiry.  Turquoise Derivatives delivery positions are margined the morning following exercise/expiry using Equity Risk Analysis (ERA) as currently used by EquityClear.

More information on becoming a clearing member can be found here.