Clearing and settlement

Post-trade activities are carried out in conjunction with LCH.Clearnet SA for clearing, and with Euroclear Bank and Clearstream Banking Luxembourg for settlement.

Trade processing

We classify financial instruments in several trading groups according to the type of product, their currency, liquidity, and several other characteristics.

Each security can be traded only in one channel at a time (‘bilateral’, ‘pass-through’ or ‘guaranteed’), according to its trading classification. However, we may move a security from ‘pass-through’ to ‘guaranteed’ classification if its liquidity changes or on a market-maker’s request.

  • Guaranteed (full CCP)

    All securities in continuous trading mode

    Liquid shares and bonds; eligible with LCH.Clearnet SA, Euroclear Bank and Clearstream Banking Luxembourg, and the bridge solution

  • Pass-through

    Continuous trading mode and auction trading mode

    Non-liquid shares and bonds, however, eligible with LCH.Clearnet SA, Euroclear Bank and Clearstream Banking Luxembourg, and the bridge solution

  • Bilateral

    Continuous trading mode and auction trading mode

    UCITS, warrants and all non-eligible financial instruments

For more information check the appendix to our trading manual

Trading manual – appendix

How it works




schema-clearing-utp_trading.jpg

What does LCH.Clearnet SA do?

LCH.Clearnet SA operates as a central counterparty (CCP) and therefore ensures that trades are cleared rapidly and cost-effectively. The novation process – the interposition of the CCP between buyers and sellers – allows members to profit from post-trade anonymity, netting and counterparty risk protection, leading to an improved liquidity and price formation.

LCH.Clearnet SA carries out its activities via indirect and direct relationships with members of LuxSE:

  • Indirect relationship: Members of LuxSE may choose to operate as Non-Clearing Members (NCM) of LCH.Clearnet SA. The agreement is signed with a General Clearing Member firm (GCM) who clears trades on their behalf.
  • Direct relationship: Another option is to operate via a direct relationship with LCH.Clearnet SA. LuxSE members can opt to become either a General Clearing Member (GCM) or an Individual Clearing Member (ICM); the difference being, GCMs may clear their own trades and trades executed by NCMs, while ICMs can only clear their own trades.

The difference: GCMs may clear their own trades and trades executed by NCMs while ICMs can only clear their own trades.

Advantages of the CCP System
  Bilateral Non-guaranteed (Pass through) Guaranteed (Central contreparty)
Delivery versus Payment 


check.png



check.png



check.png
Anonymity of transactions   


check.png



check.png
STP settlement   


check.png



check.png
Novation     


check.png
Netting     


check.png

If you need more information

Contact us




portrait-GWE.jpg
Guy Weymeschkirch

Head of Markets & Surveillance

+352 47 79 36 236 gwe@bourse.lu



contact-MARKETS_SURVEILLANCE.jpg
Trading

Markets and Surveillance Department

+352 47 79 36 200 dms@bourse.lu