Amendments to the Clearing Conditions of Eurex Clearing AG: Introduction of a USD Cash Margin Contribution Requirement (*) as basis for a USD GC Pooling license and further measures

1. Introduction

This circular contains information with respect to the service offering of Eurex Clearing AG (Eurex Clearing) and, among others, introduces amendments to the Clearing Conditions of Eurex Clearing AG (Clearing Conditions) regarding the following topics:

A. Introduction of a USD Cash Margin Contribution Requirement as basis for a USD GC Pooling license 

B. Temporary reduction of the cash handling fee for USD delivered as a USD Cash Margin Contribution in the context of a USD GC Pooling license to 10 bps p.a.

The respective changes and measures will become effective as of 13 November 2020. 

2. Required action

Clearing Members intending to be active in the clearing of GC Pooling Repo Transactions (denominated in USD) should ensure that they have the required USD payment infrastructure in place and are set up for the USD permanent cash balance at Eurex Clearing, so they can comply with a USD Cash Margin Contribution obligation on 1 December 2020. 

3. Details

A. Introduction of a USD Cash Margin Contribution Requirement as basis for a USD GC Pooling license

I. USD Cash Margin Contribution Requirement

Eurex Clearing has decided to introduce certain provisions to its Clearing Conditions that allow Eurex Clearing to require Clearing Members that clear or intend to clear GC Pooling Repo Transactions (denominated in USD) to provide an amount of USD 25 mio. (**) to Eurex Clearing as part of their Proprietary Margin. 

Eurex Clearing envisages to make use of this provision at the end of November 2020, so that the respective Clearing Members are required to fulfil the USD Cash Margin Contribution obligation on 1 December 2020. In case a Clearing Member does not comply with this obligation, Eurex Clearing intends to suspend the respective Clearing Member from the clearing of further GC Pooling Repo Transactions denominated in USD. 

If a Clearing Member stops clearing of USD GC Pooling Repo Transactions, the Clearing Member can request the redelivery of USD posted to Eurex Clearing to comply with the USD Cash Margin Contribution requirement with a prior notice period of 90 days.

II. Suspension of Clearing Members not complying with the USD Cash Margin Contribution Requirement from the USD GC Pooling Segment and termination of open transactions

In case a Clearing Member fails to fulfill the USD Cash Margin Contribution requirement, Eurex Clearing intends to exercise its right to suspend the Clearing Member from clearing of GC Pooling Repo Transactions (denominated in USD) as of 1 February 2021. However, the Clearing Member might still clear GC Pooling Repo Transactions denominated in EUR, GBP and CHF.

If a Clearing Member, who is currently set up for the USD GC Pooling market, does not wish to provide the USD Cash Margin Contribution and does not intend to clear any further GC Pooling Repo Transactions (denominated in USD) any longer, he should notify Eurex Clearing accordingly. Eurex Clearing will then exempt the Clearing Member from the USD Cash Margin Contribution requirement.

For GC Pooling Repo Transactions (denominated in USD) a Clearing Member enters into after having received the GC Pooling USD Cash Margin Contribution notice, Eurex Clearing will introduce an amendment to the Clearing Conditions which gives Eurex Clearing the right to terminate the respective transactions and to enter into replacement transactions at the Clearing Member’s costs. This amendment will not affect any GC Pooling Repo Transactions (denominated in USD), which were entered into by the Clearing Member before receipt of the GC Pooling USD Cash Margin Contribution notice and which will be settled as agreed.

In this context, the following provisions will be amended as outlined in the attachments:

• Chapter I Part 2 Subpart A Number 4.6.1 of the Clearing Conditions 
• Chapter I Part 2 Subpart B Number 5.3 of the Clearing Conditions 
• Chapter IV Part 1 Number 1.1.2 (2) (b) (ii) of the Clearing Conditions 
• Chapter IV Part 2 Number 2.11 of the Clearing Conditions 

B. Temporary reduction of the cash handling fee for USD delivered as a USD Cash Margin Contribution in the context of a USD GC Pooling license to 10 bps p.a.

To accompany the introduction of the provisions relating to the USD Cash Margin Contribution, the cash handling fee (Number 9.1 (1) of the Price List) for USD delivered as a USD Cash Margin Contribution for the purpose of the USD GC Pooling license requirement will be reduced to 10 bps p.a. until further notice. 

As of the effective date, the full version of the amended Clearing Conditions will be available for download on the Eurex Clearing website www.eurex.com/ec-en/ under the following link:

Rules and Regs > Rules and Regulations > Clearing Conditions

The changes and amendments to the legal framework of Eurex Clearing AG 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.

(*) In case no Margin Requirements exist, there is no USD Margin Contribution applicable.

(**) Depending on overall Margin Requirements, a lower USD Cash Margin Contribution can be applicable.

Attachments:

• Amended sections of the Clearing Conditions of Eurex Clearing AG

Further information