A member of
Eurex Clearing
1. Introduction
This circular contains information on proposed amendments to the service offering of Eurex Clearing AG ("Eurex Clearing") and the subsequent amendments to the legal framework of Eurex Clearing. Parts of the proposed amendments are subject to a Consultation. The amendments relate to the following topics:
| A. | Discontinuation of the Individual Clearing Model (ICM) and the Value Based Allocation Method under the Elementary Clearing Model as of 31 December 2019 | |
| B. | Deletion of "Exchange Price Approach" for the calculation of Difference Claims | |
| C. | Support of the deregistration process of the Security Trust Agreement | |
| D. | Extended flexibility to set up Basic DCs, Undisclosed Direct Clients and Indirect Clients | |
| E. | Client Clearing for the OTC Currency Clearing service | |
| F. | Minor amendments subject to the Consultation | |
| G. | Further amendments to Eurex Clearing’s legal framework outside the Consultation |
The proposed amendments outlined in Attachment 1 (topics A.-F.) are subject to the Consultation. The planned effective date is 2 January 2020, depending on the outcome of the Consultation which will be communicated in a separate Eurex Clearing circular.
The amendments outlined in Attachment 2 (topic G.) are not part of the Consultation and will come into effect on 2 January 2020.
2. Required action
I. Please contact your Clearing Key Account Manager immediately for the finalisation of the migration of the ICM Client(s) to the individual account segregation model (ISA) and the migration from the Value Based Allocation to the Asset Based Allocation within the Elementary Clearing Model by the end of October due to frozen zones around releases planned for November 2019.
II. Amendments to Chapters I, II, IV, V, VIII and IX of the Clearing Conditions of Eurex Clearing AG (Clearing Conditions), Appendices 1, 3, 4, 7, 8, 13 and 14 and Number 6.3 of the Default Management Auction Rules (Attachment 1) are subject to a Consultation which will end at midnight on 21 November 2019. Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.
3. Details
A. Discontinuation of the Individual Clearing Model (ICM) and the Value Based Allocation Method under the Elementary Clearing Model as of 31 December 2019
As announced in Eurex Clearing circular 102/18, Eurex Clearing will end the offering of
i. the Individual Clearing Model (ICM) regulated under Chapter I Part 3 of the Clearing Conditions
and
ii. the Value Based Allocation Method under the Elementary Clearing Model Provisions
as of 31 December 2019.
The proposed amendments to the Clearing Conditions and Default Management Auction Rules, due to the discontinuation of this service offering and outlined in Attachment 1, are subject to a Consultation. The planned effective date is 2 January 2020, depending on the outcome of the Consultation.
The amendments outlined in Attachment 2, due to the discontinuation of this service offering, are not part of the Consultation and will become effective as of 2 January 2020.
B. Deletion of "Exchange Price Approach" for the calculation of Difference Claims
Due to the discontinuation of the Individual Clearing Model (ICM), the so-called "Exchange Price Approach" for the calculation of the Difference Claims will be deleted from the Clearing Conditions. Furthermore, Eurex Clearing included some clarifications and improved the readability of the provisions by restructuring the relevant provisions.
To implement the proposed changes, the following provisions will be amended as outlined in Attachment 1:
The proposed amendments are subject to a Consultation. The planned effective date is 2 January 2020, depending on the outcome of the Consultation.
C. Support of the deregistration process of the Security Trust Agreement
When the Individual Clearing Model Provisions were introduced to the Clearing Conditions, Eurex Clearing also introduced the Security Trust Agreement (Appendix 8 to the Clearing Conditions) for UK Clearing Members to facilitate the registration process of the Security Interests to be granted by the Clearing Member with respect to each ICM Client pursuant to Chapter I Part 3 Subpart A of the Clearing Conditions with the UK Companies House. With the deletion of the Individual Clearing Model Provisions, also the Security Trust Agreement will be removed from the Clearing Conditions.
Thus, if a UK Clearing Member has registered the Securities Trust Agreement with the Companies House and provided that all ICM Clearing Agreements entered into by the relevant Clearing Member with respect to all its ICM Clients have been terminated by entering into Clearing Model Change Agreements, the Security Trust Agreement is not needed anymore and can be deregistered from the register of the UK Companies House.
To support an easy deregistration process for all involved parties, in particular the relevant UK Clearing Member filing the deregistration form with the Companies House, Eurex Clearing and Eurex Clearing Trustee GmbH will provide each UK Clearing Member with a letter in which Eurex Clearing and Eurex Clearing Trustee GmbH confirm that all security interests granted in accordance with the Security Trust Agreement have ceased to exist once all ICM Clearing Agreements entered into by the relevant UK Clearing Member have been terminated by entering into the relevant Clearing Model Change Agreements.
To implement the proposed changes, the following provisions will be deleted as outlined in Attachment 1:
The proposed amendments are subject to a Consultation. The planned effective date is 2 January 2020, depending on the outcome of the Consultation.
D. Extended flexibility to set up Basic DCs, Undisclosed Direct Clients and Indirect Clients
Eurex Clearing will increase the flexibility with respect to the functional set-up of Basic DCs and Undisclosed Direct Clients in case such Direct Clients only provide client clearing for Indirect Clients through Eurex Clearing.
Currently, Clearing Members are required to either set up a DC Own Account for each Basic DC or a position account for Undisclosed Direct Clients (NOSA UDC Transaction Account) in the systems of Eurex Clearing and allocate the respective Indirect Client Account to that transaction account.
With the amendment, a Basic DC can be set up in the systems of Eurex Clearing without establishing a DC Own Account. With respect to Undisclosed Direct Clients, which do not clear proprietary business through Eurex Clearing, no position account (NOSA UDC Transaction Account) needs to be set up in the systems of Eurex Clearing.
All Indirect Client Accounts not allocated to a DC Own Account or a position account relating to Undisclosed Direct Clients, will form part of one (additional) UDC Account Transaction Account Group for porting and close-out processing.
To implement the proposed changes, the following provisions will be amended as outlined in Attachment 1:
The proposed amendments are subject to a Consultation. The planned effective date is 2 January 2020, depending on the outcome of the Consultation.
Furthermore, the restriction for the allocation of Disclosed Direct Client and Indirect Client related Transaction Accounts to an Internal Omnibus Margin Account (Collateral pool) will be abandoned. Therefore, it will no longer be required that more than one GOSA Direct Client and/or GOSA Indirect Client be assigned to an Internal Margin Account under the Elementary Clearing Model.
To implement the proposed changes, the following provisions will be amended as outlined in Attachment 1:
The proposed amendments are subject to a Consultation. The planned effective date is 2 January 2020, depending on the outcome of the Consultation.
E. Client Clearing for the OTC Currency Clearing service
Last year, Eurex Clearing implemented the legal framework for inter-dealer clearing of OTC currency products. Eurex Clearing now amends its rulebook to accommodate dealer-to-client clearing services for OTC Currency Products. Client clearing services will cover the full OTC Currency Products scope including OTC FX Spot, FX Forward, FX Swap and OTC Cross Currency Swap (XCCY Swap). Besides general OTC Currency client clearing related enhancements, the amendments particularly comprise post-trade related provisions in order to align the OTC Currency Clearing services with the OTC IRS service scope.
In order to create the legal pre-conditions for OTC Currency Client, Eurex Clearing will amend the provisions as outlined in Attachment 1.
The proposed amendments are subject to a Consultation. The planned effective date is 2 January 2020, depending on the outcome of the Consultation.
F. Minor amendments subject to the Consultation
Eurex Clearing will introduce minor amendments to streamline its legal framework. Among others, Appendix 7 to the Clearing Conditions will be amended to clarify the scope of pledges granted in favour of Eurex Clearing and it will be no longer required that Clearstream Banking AG confirms receipt of a notice issued by the pledgor according to Schedule 3. Other minor amendments include, among others, the alignment and streamlining of provisions relating to netting and accumulation in Chapter VIII of the Clearing Conditions.
The proposed amendments are outlined in Attachment 1 and are subject to a Consultation. The planned effective date is 2 January 2020, depending on the outcome of the Consultation.
G. Further amendments to Eurex Clearing’s legal framework outside the Consultation
Eurex Clearing will introduce amendments to its legal framework to reflect the above-mentioned changes under topics A.-F. to its Clearing Conditions and Default Management Auction Rules. Other minor amendments that do not require a Consultation are included as well. Such amendments will be made to the following rules and regulations:
The amendments are outlined in Attachment 2 and are not part of the Consultation. They will become effective as of 2 January 2020.
Consultation of amendments outlined in Attachment 1
Pursuant to Chapter I Part 1 Number 17 of the Clearing Conditions, the proposed changes and amendments to Chapters I, II, IV, V, VIII and IX of the Clearing Conditions, Appendices 1, 3, 4, 7, 8, 13 and 14 to the Clearing Conditions and No. 6.3 of the Default Management Auction Rules (see Attachment 1) are subject to a Consultation which will end at midnight on 21 November 2019 ("Consultation Period").
Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.
During the Consultation Period, comments on proposed changes or amendments shall be only submitted through a web-based commenting service for which a registration form is available on the Eurex Clearing website www.eurexclearing.com under the following link:
Resources > Forms > Data Forms Subject: Consultation Form
The form has to be duly signed and returned to Eurex Clearing via e-mail to SpecialProvisions@eurexclearing.com, in order to obtain a User ID and Password together with a link for accessing the web-based commenting service.
To the extent that Eurex Clearing decides to implement any comments received during the Consultation, the so-amended version of the Clearing Conditions will be published after the Consultation.
The currently envisaged effective date of the changes is 2 January 2020. However, after the Consultation Period, Eurex Clearing will issue a separate circular to announce the concrete date on which the proposed changes (as the case may be, implementing comments received during the Consultation) will come into effect.
This announcement will be made with at least 15 Business Days’ notice (Regular Notification Period). However, if Eurex Clearing should receive a request for a Prolonged Notification Period from more than two Affected Customers during the Consultation Period, a Prolonged Notification Period as set out in the Clearing Conditions will be applied and Eurex Clearing will notify all affected parties accordingly.
Publication of amendments outlined in Attachment 2
The amendments outlined in Attachment 2 are not part of the Consultation and will become effective as of 2 January 2020.
As of the effective date, the full version of the amended documents will be available for download on the Eurex Clearing website www.eurexclearing.com under the following link (or, as the case may be, under a sublink of the following link):
Resources > Rules and Regulations
The changes and amendments outlined in Attachment 2 and published by this circular are deemed accepted by each affected contractual party of Eurex Clearing AG, unless the respective contractual party objects by written notice to Eurex Clearing AG within the first ten (10) Business Days after publication. Any ordinary right of Eurex Clearing AG to terminate the respective contract (including a Clearing Agreement, if applicable) shall remain unaffected.
Unless the context requires otherwise, terms used and not otherwise defined in this circular shall have the meaning ascribed to them in the Clearing Conditions or FCM Clearing Conditions of Eurex Clearing AG, as applicable.
Attachments:
Further information
| Recipients: | All Clearing Members, Basic Clearing Members, Disclosed Direct Clients, all FCM Clearing Members of Eurex Clearing AG, vendors and other affected contractual parties |
| Target groups: | Front Office/Trading, Middle + Backoffice, IT/System Administration, Auditing/Security Coordination |
| Contact: | client.services@eurexclearing.com |
| Web: | www.eurexclearing.com |
| Authorised by: | Heike Eckert |