[Federal Register Volume 89, Number 16 (Wednesday, January 24, 2024)]
[Notices]
[Pages 4635-4638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01308]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99391; File No. SR-LCH SA-2024-001]


Self-Regulatory Organizations; LCH SA; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Relating to the 
CDSClear Fee Grid for 2024

January 18, 2024.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder \2\ notice is hereby given that 
on January 4, 2024, Banque Centrale de Compensation, which conducts 
business under the name LCH SA (``LCH SA''), filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change 
(``Proposed Rule Change'') described in Items I, II and III below, 
which Items have been prepared primarily by LCH SA. LCH SA filed the 
proposed rule change pursuant to section 19(b)(3)(A) of the Act,\3\ and 
Rule 19b-4(f)(2) \4\ thereunder, so that the proposal was effective 
upon filing with the Commission. The Commission is publishing this 
notice to solicit comments on the Proposed Rule Change, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    LCH SA is proposing to amend its CDSClear fee grid for single name 
and index CDS and options products (``Fee Grid'') by incorporating 
changes in the CDSClear business and new clearing services offered (the 
``Proposed Rule Change''). The text of the Proposed Rule Change has 
been annexed hereto [sic] as Exhibit 5. No amendments to the LCH SA CDS 
Clearing Rule Book (``Rule Book'') or the CDS Clearing Procedures 
(``Procedures'') are required to effect these changes.\5\ The text of 
the Proposed Rule Change has been annexed [sic] as Exhibit 5 to File 
No. SR-LCH SA-2024-001.\6\
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    \5\ All capitalized terms not defined herein shall have the same 
definition as in the Rule Book or Procedures, as applicable.
    \6\ All capitalized terms not defined herein have the same 
definition as in the CDS Clearing Rule Book available at https://www.lch.com/system/files/media_root/CDSClear_Rule_Book__26.09.2023.pdf.
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    The implementation of the Proposed Rule Change will be contingent 
on LCH SA's receipt of all necessary regulatory approvals, including 
the approval by the Commission of the Proposed Rule Change described 
herein.

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, LCH SA included statements 
concerning the purpose of and basis for the Proposed Rule Change and 
discussed any comments it received on the Proposed Rule Change. The 
text of these statements may be examined at the places specified in 
Item IV below. LCH SA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    The purpose of the Proposed Rule Change is for LCH SA CDSClear to 
amend its Fee Grid for single name and index CDS and options products 
by incorporating changes in the CDSClear business and new clearing 
services offered. The Proposed Rule Change reflects the ongoing 
development and new product scope of the CDSClear service with the 
objective to meet Clearing Members' and Clients' evolving business 
needs. For example, among other changes, LCH SA is proposing to remove 
the [euro]200,000 rebate under the General Member Introductory Tariff 
for total notional cleared below [euro]10bn for single name and 
sovereign CDS, as this rebate was established to incentivize new 
clearing memberships as the business evolved. Likewise, LCH SA is also 
proposing to reduce the onboarding fee for options products from 
[euro]30,000 to [euro]15,000 to incentivize clearing of credit index 
options.
    LCH SA is proposing to amend the CDSClear Fee Grid for 2024 as 
follows for CDS products:

Self-Clearing Tariff for Corporates, Financials and Sovereign Index and 
Single Name CDS

i. General Member Unlimited Tariff

    LCH SA is proposing to clarify that the Annual Fixed Fee of 
[euro]1,350,000 will be charged at a rate of 1/12th for each month the 
Clearing Member group is live. A footnote will be added to the Fee Grid 
to state that a Clearing Member is considered live for the whole month 
regardless of the go-live date within the considered month. LCH SA also 
proposes to amend the ``Details'' column of the Fee Grid to clarify 
that the Annual Fixed Fee applies to all indices and all non-sovereign 
single names activity for a Financial Group of a Clearing Member. This 
change is being made to simplify the existing language and has no 
impact on the General Member unlimited tariff amounts. LCH SA also 
proposes to remove reference to the full discount applied to sovereign 
single name variable fees, as the discount will no longer apply 
beginning in 2024.

ii. General Member--Introductory Tariff

    LCH SA is proposing to apply a single annual fixed fee of 
[euro]400,000 for the General Member's Introductory Tariff. As such, 
LCH SA is subsequently proposing to remove the [euro]200,000 rebate if 
a General Member's notional amount cleared is below [euro]10bn. LCH SA 
also proposes to delete the reference to the rebate under the 
Introductory Tariff heading, as this would no longer be applicable. In 
addition, as part of this revision to the Fee Grid, LCH SA is proposing 
to clarify that the fixed fee will be charged at a rate of 1/12th for 
each month the General Member is live. Finally, LCH SA will add a 
footnote to state that a General Member is considered live for the 
whole month regardless of the go-live date within the considered month.

iii. Select Members

    For Select Members, LCH SA is proposing amendments to certain 
footnotes under the ``Select Membership'' heading. Specifically, LCH SA 
is proposing to clarify that the

[[Page 4636]]

Annual Fixed Fee for Select Members will be charged 1/12th for each 
month the Select Member is live. This amended footnote will apply to 
the Annual Fixed Fee of [euro]450,000. LCH SA also proposes to add a 
footnote clarifying the rebate available to Select Members. If a Select 
Member's total annual gross notional cleared is under [euro]10bn and 
the Select Member is live for the whole calendar year (January 1-
December 31), LCH SA will provide a [euro]200,000 rebate in the Select 
Member's December bill, resulting in a reduced Annual Fixed Fee of 
[euro]250,000.

iv. High Turnover Fee Plan

    LCH SA offers a High Turnover Fee Plan (``HTFP'') based on notional 
cleared. LCH SA is proposing to clarify that the HTFP applies on the 
notional cleared in a calendar year but excludes from the determination 
of the total cleared notional, the trades not charged under the Switch 
Programme. The HTFP will also continue to exclude the notional cleared 
for which a CCP Switch credit note was used to zero out the clearing 
fees and the notional cleared part of a CCP Switch that thus did not 
attract any clearing fees (i.e., only those trades which attract a fee 
will count towards the HTFP notionals). Finally, LCH SA is proposing to 
clarify that the HTFP does not apply to General Members.

v. Onboarding Fees

    For new Clearing Member onboardings in 2024, LCH SA is proposing to 
add a [euro]15,000 onboarding fee for the purposes of cost recovery and 
to align with other LCH SA services.\7\ LCH SA will apply this to all 
application files received after January 1, 2024.
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    \7\ LCH SA currently assesses an onboarding fee of [euro]15,000 
for its EquityClear SA and CommodityClear SA services.
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vi. Annual Account Structure Fees

    LCH SA currently offers Legally Segregated Operationally Commingled 
(``LSOC'') accounts to Clearing Members of CDSClear, in addition to 
Individual Segregated Accounts and Omnibus Segregated Accounts. LCH SA 
is proposing to continue not to charge a yearly fee for LSOC accounts 
under the Proposed Rule Change and thus no change is being made to the 
Fee Grid.

Client Clearing Tariff for Corporate, Financials and Sovereign Index 
and Single Names CDS

i. Intraday Trading Fee Plan

    LCH SA is proposing to add an intraday trading fee discount which 
will be applied by only charging the maximum notional of buys and sells 
per contract per day per trade account, where trade date is equal to 
clearing date (i.e., trades that are backloaded or the result of an 
option exercise are excluded from the discount, as trade date will be 
before the clearing date for these trades). LCH SA is proposing the 
intraday trading fee plan to clients in order to incentivize clients to 
sign up for CDSClear services. Clearing Members that would benefit from 
this tariff are usually market makers who would buy and sell the same 
instrument multiple times a day. Such Clearing Members can instead 
already benefit from the Unlimited tariff available to General Members.

ii. CCP Switch Programme

    LCH SA is proposing to amend the first footnote to clarify that the 
CCP Switch Programme (``Switch Programme'') is available to market 
participants and applicable to live CCP trades beginning on January 4, 
2024 onwards.\8\ LCH SA is not proposing any other amendments to this 
section of the Fee Grid.
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    \8\ Under the CCP switch Incentive Programme, Members and 
Clients may benefit from the programme by closing out existing CDS 
transactions at their current CDS CCP and clearing new transactions 
at LCH SA. Any trades that were moved to LCH SA from another CCP 
prior to 1 Jan 2024 will be rebated in 2023 and cannot be claimed 
for after this date.
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iii. High Turnover Fee Plan

    LCH SA is proposing to amend the footnote to clarify that the HTFP 
applies on the notional cleared in a calendar year but excludes from 
the determination of the total cleared notional, the trades not charged 
under the Intraday Trading Fee Plan or the Switch Programme. The HTFP 
will also continue to exclude the notional cleared for which a CCP 
Switch credit note was used to zero out the clearing fees and the 
notional cleared part of a CCP Switch that thus did not attract any 
clearing fees (i.e., only those trades which attract a fee will count 
towards the HTFP notionals). Finally, LCH SA is proposing to clarify 
that the HTFP does not apply to General Members.
    LCH SA is proposing to amend the CDSClear Fee Grid for 2024 as 
follows for options products:

General Members

i. Introductory Tariff

    LCH SA is proposing to clarify the Introductory Tariff floor on 
clearing fees will be charged 1/12th for each month a General Member 
Group is live. A footnote will be added to the Fee Grid to state that a 
General Member is considered live for the whole month regardless of the 
go-live date within the considered month. LCH SA also proposes to 
clarify that there will be no Electronic Exercise Platform for 
exercising credit index options (``EEP'') usage fees in 2024, as 
reference to 2023 will no longer be applicable.

ii. Unlimited Tariff

    LCH SA is proposing to clarify the Unlimited Tariff annual fixed 
fee will be charged 1/12th for each month a Member Group is live. A 
footnote will be added to the Fee Grid to state that a Member is 
considered live for the whole month regardless of the go-live date or 
the membership termination date within the considered month. LCH SA 
also proposes to clarify that there will be no EEP usage fees in 2024, 
as reference to 2023 will no longer be applicable. LCH SA also 
currently offers a discounted rate of [euro]115,000 for notional 
cleared strictly above [euro]15bn. LCH SA is proposing to clarify that 
it will provide a [euro]260,000 rebate to the Clearing Member's 
December bill if the General Member Group is live for the whole 
calendar year (January 1-December 31).

iii. New Market Participant Tariff

    LCH SA is proposing to clarify that there will be no EEP usage fees 
in 2024, as reference to 2023 will no longer be applicable. LCH SA is 
also proposing to add that in-year switches are not permitted, in order 
to align with other General Member tariffs.

iv. Onboarding Fees

    LCH SA is proposing to reduce its current onboarding fee from 
[euro]30,000 to [euro]15,000 per legal entity under the Introductory 
Tariff or per Financial Group of a Clearing Member under the Unlimited 
Tariff. LCH SA is not proposing any other amendments to this section of 
the Fee Grid.

Select Members

v. Introductory Tariff

    LCH SA is proposing to clarify that there will be no EEP usage fees 
in 2024, as reference to 2023 will no longer be applicable. LCH SA is 
not proposing any other amendments to this section of the Fee Grid.

vi. Unlimited Tariff

    LCH SA is proposing to clarify that there will be no EEP usage fees 
in 2024, as reference to 2023 will no longer be applicable. LCH SA is 
also proposing to clarify the Unlimited Tariff annual fixed fee will be 
charged 1/12th for each month a Select Member is live. A footnote will 
be added to the Fee Grid

[[Page 4637]]

to state that a Select Member is considered live for the whole month 
regardless of the go-live date within the considered month. LCH SA also 
currently offers a discounted rate of [euro]115,000 for notional 
cleared strictly above [euro]15bn. LCH SA is proposing to clarify that 
it will provide a [euro]285,000 rebate to the Select Member's December 
bill if the Select Member is live for the whole calendar year (January 
1-December 31).

vii. Onboarding Fees

    LCH SA is proposing to reduce its current onboarding fee from 
[euro]30,000 to [euro]15,000 per Legal Entity under the Introductory 
Tariff or per Financial Group of a Select Clearing Member under the 
Unlimited Tariff. LCH SA is not proposing any other amendments to this 
section of the Fee Grid.

Clients

i. Variable Fees

    LCH SA is proposing to apply the full discount of client variable 
fees to 2024, as 2023 will no longer be applicable. LCH SA is not 
proposing any other amendments to this section of the Fee Grid.
    LCH SA is also proposing to establish a fee structure for the 
retrieval of archived files. This proposed change will establish the 
fee structure currently applicable to LCH SA's EquityClear and 
RepoClear services. Specifically, LCH is proposing to charge a fee of 
[euro]500 for the first archived file retrieval and [euro]250 for each 
additional archived file retrieval. For ancillary requests, including 
ad hoc requests related to investigations, analysis and data and 
analytics, LCH SA is proposing to charge a fee based on time spent on 
the request. LCH SA is proposing to charge [euro]500 for \1/2\ day, 
[euro]1,000 for 1 day and [euro]500 for each additional \1/2\ day. LCH 
SA is also proposing to clarify that the charge for certain large 
requests (i.e., >50 files) will be provided in a quote as determined by 
LCH SA. In addition, LCH SA is also proposing to clarify that it will 
provide a more tailored estimate for each ancillary request received. 
To clarify, the proposed archived report fee structure is currently 
implemented for EquityClear and RepoClear, and LCH SA is proposing to 
extend to CDSClear as well.
2. Statutory Basis
    LCH SA believes that the Proposed Rule Change is consistent with 
the requirements of section 17A of the Exchange Act \9\ and the 
regulations thereunder applicable to LCH SA. section 17A(b)(3)(D) of 
the Act \10\ requires that the rules of a clearing agency provide for 
the equitable allocation of reasonable dues, fees and other charges 
among its participants.
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    \9\ 15 U.S.C. 78q-1.
    \10\ 15 U.S.C. 78q-1(b)(3)(D).
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    LCH SA believes the amendments to the Fee Grid are reasonable given 
the changes to its CDSClear service and equitable for both existing and 
new Clearing Members. Specifically, the Proposed Rule Change reflects 
the evolution and further maturity of LCH SA's CDSClear service, 
including the expansion of the CDSClear service in the United States 
and to support the LSOC model, and provides for additional clarity to 
existing and new Clearing Members. LCH SA is proposing to introduce an 
onboarding fee of [euro]15,000 per entity beginning in 2024 to align 
with the onboarding fees assessed for other services of LCH SA.\11\ In 
an effort to further align fees assessed for each service, LCH SA is 
proposing to reduce the options onboarding fee from [euro]30,000 to 
[euro]15,000. For house accounts, LCH SA is proposing a single annual 
fixed fee of [euro]400,000 for General Members' Introductory Tariff and 
removing the [euro]200,000 rebate for notional cleared below 
[euro]10bn. LCH SA is also clarifying the application of the rebate 
pertaining to the fixed fee for Select Members. Specifically, a rebate 
of [euro]200,000 will be applied to a Select Member's December invoice, 
such that the Select Member will only pay a fixed fee of [euro]250,000 
instead of [euro]450,000, provided that the Select Member is live for 
the whole calendar year (January 1-December 31) and its annual notional 
cleared is below [euro]10bn.
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    \11\ LCH SA currently assesses an onboarding fee of [euro]15,000 
for its EquityClear SA and CommodityClear SA services. Please see 
LCH SA onboarding fees available at: https://www.lch.com/membership/sa-membership/sa-fees.
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    To provide clarity on the application of the fixed fee for General 
Members and Select Members for both single name and index CDS and 
options products, LCH SA is proposing to add clarifying language 
stating that 1/12th of the annual fixed fee will be charged to General 
Members Unlimited, General Members Introductory and Select Members that 
are live for any part of a calendar month. This clarification will 
address mid-year joiners and leavers.
    For client clearing, LCH SA proposes to institute an Intraday 
Trading Fee Plan discount, whereby only the maximum notional of buys 
and sells per contract per day per trade account will be charged and 
only in the case where the trade date and clearing date are equal. LCH 
SA also proposes to clarify that under its current HTFP, only 
chargeable trades will count towards HTFP notionals, however trades not 
charged under the Intraday Trading Fee Plan or the Switch Programme 
would not be included. The HTFP will also continue to exclude the 
notional cleared for which a CCP Switch credit note was used to zero 
out the clearing fees and the notional cleared part of a CCP Switch 
that thus did not attract any clearing fees.
    LCH SA will continue to incentivize market participants clearing 
new transactions at LCH SA CDSClear. Currently, General Members and 
Select Members and Clients can benefit from LCH SA's Switch Programme 
by closing out existing CDS transactions at their current CDS CCP and 
clearing new transactions at LCH SA CDSClear. After registration, such 
Members will not be charged variable fees for new transactions cleared 
at LCH SA CDSClear under the Switch Programme during a 6-month period 
and a credit note will be applied to Members' and Clients' clearing 
accounts, covering the fees associated with closing out positions at 
another CDS CCP. The credit note will be applicable towards fees 
associated with future transactions cleared at LCH SA CDSClear. LCH SA 
is proposing to clarify that the Switch Programme is available to 
market participants and applicable to live CCP trades beginning January 
4, 2024, onwards.
    Finally, LCH SA is proposing to continue the fee holiday for 
options Clients for 2024 and will continue not to charge for EEP usage 
fees in 2024 for options General Members, Select Members and Clients. 
LCH SA will also provide Members with the option to request archived 
reports and proposes to align the fee associated with retrieval and any 
ancillary requests thereto, with other LCH SA services.\12\ LCH SA 
therefore believes that the Proposed Rule Change is consistent with the 
requirements of section 17A(b)(3)(D) of the Act \13\ in that the 
amendments to the Fee Grid for 2024 are reasonable and equitable among 
its participants.
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    \12\ LCH SA currently offers this service for its EquityClear SA 
and RepoClear SA services.
    \13\ 15 U.S.C. 78q-1(b)(3)(D).
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B. Clearing Agency's Statement on Burden on Competition

    Section 17A(b)(3)(I) of the Act \14\ requires that the rules of a 
clearing agency not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act. LCH SA does not 
believe that the Proposed Rule Change

[[Page 4638]]

would impose any burden on competition. The purpose of the Proposed 
Rule Change is for LCH SA to amend its Fee Grid for 2024 by 
incorporating changes to the CDSClear business and new clearing 
services offered to meet Clearing Members' and Clients' evolving 
business needs. As part of this effort LCH SA is proposing to align 
certain fees with other LCH SA service offerings, further incentivize 
competition by offering certain discounts and make clarifying changes 
on how fees will be calculated and applied. LCH SA believes the 
Proposed Rule Change would not burden any Clearing Members or other 
market participants given that amendments to the Fee Grid will be 
applied equally for all CDSClear Clearing Members and Clients. 
Therefore, LCH SA does not believe that the Proposed Rule Change would 
impose a burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
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    \14\ 15 U.S.C. 78q-1(b)(3)(I).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments relating to the Proposed Rule Change have not been 
solicited or received. LCH SA will notify the Commission of any written 
comments received by LCH SA.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective upon filing pursuant 
to section 19(b)(3)(A) \15\ of the Act and paragraph (f) of Rule 19b-4 
\16\ thereunder. At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-LCH SA-2024-001 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-LCH SA-2024-001. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549 on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of LCH SA and on LCH 
SA's website at: https://www.lch.com/resources/rulebooks/proposed-rule-changes.
    Do not include personal identifiable information in submissions; 
you should submit only information that you wish to make available 
publicly. We may redact in part or withhold entirely from publication 
submitted material that is obscene or subject to copyright protection. 
All submissions should refer to File Number SR-LCH SA-2024-001 and 
should be submitted on or before February 14, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01308 Filed 1-23-24; 8:45 am]
BILLING CODE 8011-01-P