On May 5, LCH LTD reported on ILS TELBOR SwapClear transactions.
LCH LTD, LCH SA announced it will convert all open SwapClear contracts that reference ILSTELBOR, so they reference the risk-free rate, ILS-SHIR-OIS Compound, detailed here.
Explained that, as part of this, all previously eligible SwapClear transactions - both interest rate swaps and forward rate agreements - that reference ILS-TELBOR or ILS-TELBOR01-Reuters will become ineligible for clearing on and from May 19, 2025.
Rule Changes
LCH will revise Product and Eligibility Manual Schedule 2 (SwapClear Service) and FCM Product and Eligibility Manual to remove all references to ILS TELBOR transactions.
The changes to the LCH Rules are included as Appendices I-II in black line form.
Core Principle Compliance
LCH reviewed proposed rule changes against Core Principles requirements.
It will continue to comply with all requirements, standards therein, with potential relevance to Core Principles C Participant and Product Eligibility), L Public Information.
The changes described in this filing meet the objectives of Core Principle C, including that LCH has appropriate requirements for determining the eligibility of submitted transactions accounting for LCH’s ability to manage the associated risks.
LCH considered factors including trading volume, liquidity, availability of pricing data, availability of rates themselves, and the ability for LCH to manage any associated risks within LCH’s existing operational, risk management and default management tools.
LCH determined that this change meets the requirements of Core Principle C.
Changes also ensure LCH meets Core Principle L objectives, including that, as well as specified requirements of CFTC Regulation §39.21, LCH makes available information relevant to participation in LCH clearing, settlement activities, including contract terms.
LCH considered its public information requirements and believes amending the Procedures within LCH Rules meets the requirements of Core Principle L.
As such, LCH believes the changes are consistent with Core Principle C requirements on Participant and Product Eligibility under CFTC Regulation §39.12.
And with Core Principle L on Public Information under CFTC Regulation §39.21.
Effectiveness
These described changes will be effective not earlier than May 19, 2025.
In May 2025, LCH LTD self-certified to CFTC for benchmark reform, see #217194.
