Clearing Service rulebooks are complex and lengthy documents. In this article I use Google Gemini to compare specifics of the rulebooks of JSCC and LCH for Interest Rate Swaps Clearing.

Background

In Capital Markets, all Clearing Service providers such as JSCC or LCH, publish rulebooks that specify in immense details the rules they operate by. These documents are generally public and are important documents for member firms to understand the detailed rules of the clearing service.

However given their size, complexity and precise legal language, such documents are difficult to read and understand.

In a recent article, I compared the rulebooks for ICE Clear Credit and LCH CDSClear for Credit Derivatives, using Google Gemini.

My goal in today’s blog is to try a similar exercise for JSCC IRS and LCH SwapClear rulebooks to compare and understand some of the differences.

Let’s Start

From the JSCC site, I downloaded “JSCC Interest Rate Swap Clearing Business Rules“, a 189 page document, as well as the 8 other documents under the Handling of Business Rules section.

From the LSEG website, I downloaded “General Regulations of LCH Limited“, a 320 page document, as well as the 3 other documents under the Rulebook section and 4 from Procedures for sections 1, 2c, 3, and 4.

As I have learnt over the course of my prior four blogs on Clearing Rulebooks (see CCPs), when use GenAI tools, it is good practice to:

• provide clear context for prompts,
• upload the specific documents of interest,
• include details and notes,
• provide examples of the response expected,
• breakdown work into chunks

However trying to create a long one-shot prompt to do a comparison without any of our own understanding of the JSCC and LCH documents is unlikely to lead to good results.

Let’s proceed in a step by step fashion to build up our understanding of the differences from the perspective of a person working for a firm that is a member of LCH SwapClear and considering joining JSCC IRS. This means we are specifically interested in what is different in the JSCC rules from the LCH ones.

Definitions

Scanning the main JSCC and LCH document, I note that both have an extensive Definitions section at the start, as is common in legal documents.

So, I decided to start by uploading just these two documents into Gemini with 2.5 Pro selected and entered the following prompt:

The attached document General Regulations of LCH Limited in Regulation 1, provides meanings for the definitions used by LCH. 
The document JSCC Interest Rate Swap Clearing Business Rules provides meanings for the definitions used by JSCC in Article 2, (which are also listed in alphabetical order in the section Attachment 1) and further definitions not defined in Article 2 are given in Attachment 2 with the source Article they are defined in. 
Your task is to compare the JSCC definitions with LCH ones to determine which JSCC definitions do not have equivalents that are materially the same as LCH definitions, note wording can be very different but the meaning be equivalent. Output a table showing the JSCC definitions that are materially different from the closest LCH ones, or do not exist in the LCH definitions.

(Note I have tried to give as must detail as possible, without specifying the exact output format).

This ask is by no means a simple task, it would take many hours for a human.

After 10s, Gemini started to output the below:

And the full table in GSheets is at this link.

The table identifies 23 rows from the 164 JSCC definitions (120 + 54 from Attach 1 & 2), which are “materially different from the closest LCH ones, or do not exist in the LCH definitions”.

While plausible, looking at these I see false positives like Blended Rate Compression or Unwind Fee, which will exist and be materially the same at both CCPs.

Now I could go further and ask to see a mapping table of those definitions that were determined to be equivalent, check these and then dig deeper into the ones assumed to be different.

But let’s move on from definitions to the rules themselves.

Membership

Given my perspective of working for a firm that is an existing LCH SwapClear member and is considering JSCC IRS membership, one of the first questions I would have is, “are there new requirements I need to satisfy to qualify for clearing membership?”.

So I uploaded the LCH Section 1 document on Clearing Member Status and entered the prompt:

Given that my firm has Clearing member status at LCH SwapClear as detailed in the new attached document, what articles in Chapter 2 of the JSCC IRS Swap Clearing Rules for a Registered Financial Institution should I scrutinise as my firm is unlikely to satisfy them?

The first part of the response is:

The full text is here and details specific articles and the reason to scrutinise these, which is very helpful.

The last part of this is:

In conclusion, while your experience as an LCH SwapClear member provides a strong foundation, you must pay special attention to JSCC’s Japan-specific capital ratio requirements, its unique Parental Guarantee framework, the requirement for a representative in Japan, and its prescriptive risk-based triggers for intervention. These areas are materially different from the LCH framework and will require dedicated legal, compliance, and financial analysis.

Overall, I am happy with the response for this prompt.

Margin

Margin is a large topic and would better be tackled in chunks so let’s try and see what we can learn about the differences in Intra-day Margin Calls from the rules and procedure documents.

So I uploaded the LCH Procedures Section 2c SwapClear Clearing Service document and entered the following:

The new attached document provides detail on LCH SwapClear Intra-Day Margin Calls, for this concept check JSCC IRS Swap Clearing Rules, and identify material differences in concept or practice

Which returned:

That’s a good summary, highlighting the LCH use of PPS and anytime calls, with JSCC same-day 3:30pm deadline and a grace period for customers of a clearing participant.

Compression

Compression is also a large and important topic with Clearing Houses offering their own services and allowing the use of approved third parties. Let’s see what we can learn about this.

The new attached document provides detail on LCH SwapClear Compression and this is also covered in Regulation 56 of General Regulations of LCH Limited, for this concept check JSCC IRS Swap Clearing Rules, and identify material differences in concept or practice

The response starts with:

And the full text is here.

It is a good start point, but there is a lot more to dive into here, which I don’t have time for in this article.

Default Management

I would next go onto Default Management by uploading further documents from LCH and JSCC that cover this topic, however that is such a large topic that it deserves a blog by itself.

So let’s end todays blog here.

Before we end, a few learnings.

Learnings

Comparing CCP Rulebooks is a complex task.

The documents are large and many.

Familiarity with the structure is important.

As is familiarity with domain concepts.

Following a structured step-by-step approach is helpful.

Which is by no means easy or quick to do.

But with practice and help, it becomes easier.

Offering a quicker path to answers and knowledge.

In Summary

• Approach: Used Google Gemini to compare JSCC and LCH IRS rulebooks, focusing on definitions, membership, margin, and compression.
• Findings: Differences in membership criteria, margin call timing, and some compression processes.
• Takeaway: Comparing CCP rulebooks is complex but manageable with structured prompts and GenAI tools.