Written question asked by Lord Myners (Labour), in the House of Lords. It was answered by Lord Sassoon (Conservative) on Monday, 21 November 2011.

Finance: Clearing Houses

Question: To ask Her Majesty’s Government whether they intend to review the arrangements under which the margin triggers on Italian and French sovereign bonds traded in London and cleared through LCH.Clearnet are established by entities under the supervision of French regulators.

Answer: London based LCH.Clearnet.Ltd and its Paris-based sister clearing house LCH.Clearnet SA are wholly owned subsidiaries of the holding company LCH.Clearnet Group Limited but they operate independently of each other. LCH.Clearnet Ltd is a recognised clearing house and is lead regulated by the Financial Services Authority (FSA) and the Bank of England. The FSA supervises LCH.Clearnet Ltd, including its risk management policies and operations, on a close and continuous basis. LCH.Clearnet SA is based in Paris. It is lead regulated by the French authorities but it also holds a recognised overseas clearing house (ROCH) license in the UK. As is intended under the ROCH regime, the FSA places reliance on the home state supervision of LCH.Clearnet SA for day-to-day regulation of this clearing house. The FSA and Bank of England are members of the Joint Regulatory Authorities (JRA), the regulatory college for the LCH.Clearnet Group (which includes LCH.Clearnet Ltd and LCH.Clearnet SA). The JRA meets regularly at operational and management levels and considers a wide range of areas of common interest for the participant authorities.

Secondary information