SwapClear Client Clearing
Client Clearing Standard Terms (French Law) / Version3.0 dated 27 August 2014
CLIENT CLEARING STANDARD TERMS
(FRENCH LAW)
A18476090
1
SwapClear Client Clearing
Client Clearing Standard Terms (French Law) / Version3.0 dated 27 August 2014
Background and Purpose
These provisions shall be known as the “Client Clearing Standard Terms (French Law)”.
In order to facilitate the clearing of certain transactions (originally entered into under a French FBF Master Agreement Relating to Transactions on Forward Financial Instruments (Convention-cadre FBF relative aux opérations sur instruments financiers à terme) with LCH.Clearnet, parties may enter into a Client Clearing Agreement (the relevant “Client Clearing Agreement”) incorporating these Client Clearing Standard Terms (French Law) and the relevant Swap Agreement.
1Interpretation and purpose
1.1Definitions: Capitalised terms not otherwise defined in these Client Clearing Standard Terms (French Law) or in the Clearing FBF Master Agreementshall have the meaning specified in the relevant Client Clearing Agreement, the relevant Non-Clearing FBF Master Agreementor the LCH Rules. In the event of any inconsistency between any such documents, the LCH Rules shall prevail. In addition, the following expressions have the following meanings and shall, to the extent used in the Clearing FBF Master Agreement, be deemed to be inserted into it:
“Accepted Transaction” has the meaning specified in Clause 4.1.2.
“Additional Transfer Conditions” means the additional transfer conditions (if any) specified as such in the Client Clearing Agreement.
“Associated LCH Transaction” means, in respect of a Transaction, the related SwapClear Contract (as defined in the LCH Rules) entered into between Party A and LCH.Clearnet and credited to Party A’s Client Account at LCH.Clearnet.
“BackupClearing Member” has the meaning specified in the LCH Rules.
“Clearing Default” has the meaning specified in Clause 6.2.2.
“Clearing FBF Collateral Annex” has the meaning specified in Clause 2.2.
“Clearing FBF Master Agreement” has the meaning specified in Clause 2.1.
“Client Account” has the meaning given to client account in the LCH Rules.
“Client Clearing Standard Terms (French Law)” means, when used in the Clearing FBF Master Agreement, the Client Clearing Standard Terms (French Law) specified in the relevant Client Clearing Agreement and, otherwise, has the meaning given in the above Recitals.
“Collateral Annex” means a Collateral Annex (Annexe Remises en Garantie) in the form published by the Fédération bancaire françaisein July 2007.
“FBF2001 Master Agreement”means the form of FBF Master Agreement Relating to Transactions on Forward Financial Instruments (Convention-cadre FBF relative aux opérations sur instruments financiers à terme)published in August 2001 by the Fédération bancaire française.
“FBF2007 Master Agreement”means the form of FBF Master Agreement Relating to Transactions on Forward Financial Instruments (Convention-cadre FBF relative aux opérations sur instruments financiers à terme) published in July 2007 by theFédération bancaire française.
“FBF2013 Master Agreement”means the form of FBF Master Agreement Relating to Transactions on Forward Financial Instruments (Convention-cadre FBF relative aux opérations sur instruments financiers à terme) published in June 2013 by the Fédération bancaire française.
“FBF Master Agreements” has the meaning specified in Clause 2.1.
“LCH Business Day” means a day on which LCH.Clearnet is open for general business.
“LCH.Clearnet” means LCH.Clearnet Limited.
“LCH Default” means the occurrence of a default, termination event or other similar event in respect of LCH.Clearnet that, under the LCH Rules, entitles Party A to terminate, or results in automatic termination of, one or more Associated LCH Transactions.
“LCH Default Rules” has the meaning given to “Default Rules” in the LCH Rules.
“LCH Disruption Event” means the occurrence on or after the date of the relevant Client Clearing Agreement of one or more of (i) an LCH Insolvency Event, and (ii) an LCH Default and (iii) any event that occurs, or any action that is taken or not taken by or in relation to LCH.Clearnet (including, without limitation, a default or deferment by it in making any payment or in performing any of its obligations relating to any Associated LCH Transactions and associated margin) the effect of which is (a) to create a material mismatch between the respective rights, obligations or exposure of Party A and LCH.Clearnet pursuant to an Associated LCH Transaction and the respective rights, obligations or exposure of Party B and Party A pursuant to the related Transaction under the Clearing FBF Master Agreement or (b) to result in any loss, liability, cost, claim, damages or expenses being incurred by Party A with respect thereto.
“LCH Insolvency Event” means the occurrence of any one or more of the following events: LCH.Clearnet (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4)(A) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in Clause (A) above and either (I) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (II) is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 15 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) above (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.
“LCH Rules” means the rules, regulations, procedures or agreements (including the LCH General Regulations and the LCH Default Rules), applicable to Party A and/or an Associated LCH Transaction,in each case as published by LCH.Clearnet and as the same may be amendedfrom time to time.
“LCH Valuation”means, for the purposes of determining the value of each terminated Transaction or each group of terminated Transactions, the valuation ascribed by LCH.Clearnet to the related Associated LCH Transaction(s) (excluding the value of any collateral posted by Party A in favour of LCH.Clearnet) as at the Local Business Day on which such Associated LCH Transaction(s) is/are terminated in accordance with the LCH Rules.
“Losses” means any losses, claims, injuries, damages, judgments, interest on judgments, assessments, taxes, costs, fees, charges, amounts paid in settlement or other liabilities (including, without limitation, reasonable attorneys’ fees, costs of collection and any reasonable cost incurred in successfully defending against any claim), provided that a person’s Losses will not include any injuries, costs, losses and expenses which are directly caused by the relevant person’s fraud (fraude), wilful default (dol) or gross negligence(faute lourde).
“Net Clearing Default Adjustment” means an amount determined by Party B (being the party which is not the Affected Party) equal to:
(i)the sum of:
(a) if LCH.Clearnet credits a Client Account of a Backup Clearing Member with one or more SwapClear Contracts for the account of Party B pursuant to the Default Rules, the Termination Currency Equivalent of the LCH Valuation of such SwapClear Contracts at the time they are credited to such Client Account. Such amount shall be negative where the Backup Clearing Member is in-the-money and LCH.Clearnet is out-of-the-money in respect of such SwapClear Contracts, and shall otherwise be positive; plus
(b)if LCH.Clearnet debits the Clearing Member Current Collateral Balance and/or credits the Clearing House Current Collateral Balance, in either case, in relation to a Backup Clearing Member and for the account of Party B in relation to the SwapClear Contracts referred to in sub-paragraph (a) above, the Termination Currency Equivalent of the Weighted Value of the Collateral of such debit and/or credit determined at the time of such debit or credit (excluding any element of any such debit or credit which represents assets transferred (or required to be transferred) between LCH.Clearnet and the Backup Clearing Member in order to reflect such element); minus
(c)if LCH.Clearnet credits the Clearing Member Current Collateral Balance and/or debits the Clearing House Current Collateral Balance, in either case, in relation to a Backup Clearing Member and for the account of Party B in relation to the SwapClear Contracts referred to in sub-paragraph (a) above, the Termination Currency Equivalent of the Weighted Value of the Collateral of such debit and/or credit determined at the time of such debit or credit (excluding any element of any such debit or credit which represents assets transferred (or required to be transferred) between LCH.Clearnet and the Backup Clearing Member in order to reflect such element); or
(ii)solely where Party A is an Exempt Client Clearing Member, if LCH.Clearnet transfers a Client Clearing Entitlement to Party B (or to a party for the account of Party B) pursuant to the Default Rules, the Termination Currency Equivalent of such Client Clearing Entitlement at the time such amount is determined by LCH.Clearnet. Such amount shall be negative; or
(iii)otherwise, zero.
“Non-Clearing FBF Master Agreement” has the meaning specified in the relevant Client Clearing Agreement.
“Party A” means the party specified as such in the relevant Client Clearing Agreement.
“Party B”means the party specified as such in the relevant Client Clearing Agreement.
“Party B Default” has the meaning specified in Clause 3.3.
“Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
“Security Deed” means, for so long as Party A is not an Exempt Client Clearing Member, the security deed executed by Party A creating a security interest in favour of Party B in the form prescribed by LCH.Clearnet for the time being outstanding.
“Set-off Suspension End Date” means the date on which either (i) where Party A is an Exempt Clearing Member, the date on which the acceleration of its obligations under its Undertaking to Pay or Deliver has taken place such that such obligations become immediately due and payable and such obligations have been satisfied by LCH.Clearnet enforcing its security granted in its favour by Party A under the relevant Deed of Charge and/or applying any other assets available to it and all assets in connection with such acceleration, satisfaction and enforcement together with any such other assets, in each case that are referable to Party B under the Client Account to which these Client Clearing Standard Terms (French Law) relate, have been transferred to Party B or (ii) otherwise, the date on which enforcement by Party B of its rights under the Security Deed has been completed and all amounts in connection with such enforcement have been paid.
“Swap Agreement” means the Clearing FBF Master Agreement (including the Collateral Annex) together with the Client Clearing Agreement.
“SwapClearClearing Member” has the meaning specified in the LCH Rules.
“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Termination Date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Termination Date. The foreign exchange agent will, if only one party is obliged to make the relevantdetermination, be selected in good faith by that party and otherwise will be agreed by the parties.
“Transfer Conditions” means, in relation to a requested transfer of all of the rights and obligations of Party A with respect to one or more Transactions under the relevant Clearing FBF Master Agreement and the related Associated LCH Transaction (together with any related assets comprised in the Associated Collateral Balance, if relevant) to one or more other clearing members of LCH.Clearnet, (i) if required by Party A, Party B will have transferred additional Eligible Financial Assets as a Transfer of Collateral required to be made pursuant to the terms of the Collateral Annex to the relevant Clearing FBF Master Agreement in an amount specified by Party A (a) which Party A considers, acting in a commercially reasonable manner, to be sufficient to protect it from the risk that one or more of the Transactions to be transferred are not so transferred and/or (b) to satisfy any additional Transfers of Collateral arising in respect of Transactions under the relevant Clearing FBF Master Agreement that are not the subject of the requested transfer which (A) are imposed by the LCH Rules as a condition to the relevant transfer or (B) will result from the relevant transfer pursuant to the terms of the Collateral Annex to the Clearing FBFMaster Agreement and (ii) any Additional Transfer Conditions.
1.2Interpretation and Construction: In these Client Clearing Standard Terms (French Law), except to the extent that the context requires otherwise or to the extent specified to the contraryin these Client Clearing Standard Terms (French Law):
1.2.1in the event of any inconsistency between the terms of (a) either the Non-Clearing FBF Master Agreement or the Clearing FBF Master Agreement (as defined below), including the Schedules to them and any Collateral Annex to the Non-Clearing FBF Master Agreement,and (b) these Client Clearing Standard Terms (French Law), these Client Clearing Standard Terms (French Law)shall prevailwith respect to the subject matter of these Client Clearing Standard Terms (French Law);
1.2.2in the event of any inconsistency between any other agreement between the parties and these Client Clearing Standard Terms (French Law), these Client Clearing Standard Terms (French Law)shall prevailwith respect to the subject matter of these Client Clearing Standard Terms (French Law);
1.2.3the words “include” and “including” are to be construed without limitation;
1.2.4references to these Client Clearing Standard Terms (French Law)include their Appendices;
1.2.5references to Clauses are to Clauses of these Client Clearing Standard Terms (French Law) unless specified otherwise;
1.2.6use of the singular shall include the plural and vice versa; and
1.2.7headings are for ease of reference only and shall be ignored in interpreting these Client Clearing Standard Terms (French Law).
1.3Purpose: The purpose of the relevant Client ClearingAgreement generally and the purpose of Clause 3of these Client Clearing Standard Terms (French Law) specifically is to permit Party Bto access central counterparty clearing for certain types of Transactions and to maximise Party B’sability to move (by way of transfer or termination, close out and replication) positions represented by those Transactions to a Backup Clearing Member upon a Clearing Default with respect to Party A. By entering into the relevant Client Clearing Agreement, each party thereto agrees that it is in its commercial interests to achieve the purpose of the relevant Client ClearingAgreement and acknowledges that to do so requires both parties to forego certain protections that might otherwise be afforded to it under netting and set-off arrangements more typical than those included in these Client Clearing Standard Terms (French Law). These provisions have been specifically agreed by thepartiesto the relevant Client Clearing Agreement and are a material and essential feature thereof without which the parties would not have entered into the relevant Client ClearingAgreement.
2Execution ofthe Clearing FBF Master Agreement and Clearing FBF Collateral Annex
2.1Clearing FBF Master Agreement: By entering into the relevant Client Clearing Agreement,the parties thereto agree that,with effect from the date thereof,they haveentered into an additional separate agreement dated as of the date of the relevant Client Clearing Agreementon terms which are, save as provided in these Client Clearing Standard Terms (French Law) or such Client Clearing Agreement, identical to those of the Non-Clearing FBF Master Agreement,including the Schedule thereto,but excluding any Collateral Annex thereto and excluding any reference to any other credit support documents (if any)contained therein (the “Clearing FBF Master Agreement” and together with the Non-Clearing FBF Master Agreement, the “FBF Master Agreements” and each an “FBF Master Agreement”).
2.2Collateral Annex (Annexe Remise en Garantie): The parties to the relevant Client Clearing Agreementagree that, with effect from the date thereof, they have entered into a Collateral Annex with an Article11.3 in the form set out in Schedule 2to the relevant Client Clearing Agreementwith respect to the Clearing FBF Master Agreementonly (the “Clearing FBF Collateral Annex”).