We provide central counterparty clearing on certain markets. We provide this service as standard through an Omnibus Segregated Clearing Account (OSCA) free of charge to our clients.
It is also possible for clients to choose an Individual Segregated Clearing Account (ISCA) instead of, or in addition to, the omnibus account we provide as standard.
Key features of these two account types are listed below:
Central Counterparty Clearing is a model of trading in which a clients’ credit exposure to his/her broker is transferred to a central clearing house. It forms one of the European Union’s (and wider G20’s) key tenets in respect to necessary financial reform following the recent global economic crisis and is aimed at increasing stability in the over-the-counter (OTC) derivatives markets by providing greater transparency and reducing counterparty risk. In practical terms, in a Central Counterparty Clearing model when we take a trade from a client we immediately execute a back-to-back trade with a Central Counterparty Clearing house and move all or part of the client’s margin capital to the Clearing House – this effectively transfers the client’s credit exposure from us to the Clearing House. Client funds remain fully segregated from those of the firm, and those of the Clearing House, in accordance with FCA CASS rules. Client funds protection remains unchanged.
Further information can be found in our Guide to Central Counterparty Clearing.
Your money has always been and will always remain protected with us in full compliance with FCA rules.
City Index will be using the leading global independent clearing house, LCH.Clearnet, which is overseen by the regulator in each jurisdiction in which it operates (including the Financial Conduct Authority in the UK).
LCH.Clearnet provides services to major international exchanges and platforms, as well as a range of OTC markets. By assuming the counterparty risk, LCH.Clearnet underpins many important financial markets, facilitating trading and increasing confidence within the market.
Only your margin will be transferred to the clearing house and they will hold that money in a segregated client transaction account that may not be combined with any other account. The clearing house will have no right to set-off against the client transaction account any amounts owing to the clearing house on any other account.
Irrespective of protections that we put in place under the FCA Rules, contingent risks remain so that in the unlikely event that either the clearing house or we become insolvent you may not receive back all of the monies in which you have a proprietary claim. However, in the event of our insolvency you may be entitled to compensation under the Financial Services Compensation Scheme as explained in our General Terms.
For further information please see our Risk Warning Notice in our Terms and Policies document.
The primary difference between these two accounts is the nature of segregation. In both accounts client funds are fully segregated from assets of the firm and the clearing house, but in an OSCA account client funds are held with other retail client funds, while in an ISCA funds are held separately in your name only.
You do not need to take any action. Once central clearing is introduced on a market, any positions you hold and any new trades that you place in that market will automatically be cleared through an OSCA.
If you wish to open an ISCA account you can find all the details on these pages, then contact our client management team to request an ISCA election form.
To open an ISCA account you will need to complete an ISCA election form and pay the account opening fees. Contact our client management team to make these arrangements.
Please note that if you elect to hold only an ISCA account your existing account will be closed, and you will only be able to trade markets that are centrally cleared.
If you choose to hold both an OSCA and an ISCA account you must manage the positions yourself.
We provide central counterparty clearing through an Omnibus Segregated Clearing Account (OSCA) free of charge as standard to all clients.
If you wish to open an ISCA account, fees apply:
This information can be found in the Market Information Sheets. You can also contact our client management team for details of centrally cleared markets.