08 Oct 2021

Eurex Clearing

Amendments to the legal framework of Eurex Clearing AG with respect to the introduction of the NDF Clearing Service - Consultation

Eurex Clearing Circular 090/21 Amendments to the legal framework of Eurex Clearing AG with respect to the introduction of the NDF Clearing Service - Consultation


1.   Introduction

This circular contains information with respect to the service offering of Eurex Clearing AG (Eurex Clearing) and introduces amendments to the Clearing Conditions of Eurex Clearing AG (Clearing Conditions), the Price List of Eurex Clearing AG (Price List) and the Default Management Auction Rules (DM Auction Rules) regarding the introduction of the NDF Clearing Service and amending the following documents of the legal framework of Eurex Clearing:

A.    Amendments to the Clearing Conditions (Attachments 1, 2, 3, 4)
B.    Amendments to the Default Management Auction Rules (Attachment 5)
C.    Amendments to the Price List (Attachment 6)

All amendments will become effective as of 6 December 2021.

The amendments to the Clearing Conditions introduced in Attachment 4 and the amendments to the DM Auction Rules introduced in Attachment 5 fall within the scope of Special Provisions of the Clearing Conditions and are hence subject to a consultation process (Consultation). The Consultation will end with the expiry of 8 November 2021 (Consultation Period). The planned effective date of these amendments is 6 December 2021, depending on the outcome of the Consultation which will be communicated in a separate Eurex Clearing circular.

Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.

PLEASE NOTE: This Circular only relates to the implementation of the Non-Deliverable Forwards (NDF) Clearing Service into the legal framework of Eurex Clearing. The actual go-life of the NDF Clearing Service remains subject to the receipt of the regulatory approval by the German Federal Financial Services Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin). Eurex Clearing will publish the go-live date in a separate Circular after receipt of the approval by BaFin.

2.   Required action

The amendments to the Clearing Conditions introduced in Attachment 4 and the amendments to the DM Auction Rules introduced in Attachment 5 are subject to a Consultation which will end with the expiry of 8 November 2021.

Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.

3.   Details of the initiative

The NDF Clearing Service is driven by increased market demand in the clearing of Non-Deliverable Forwards. 

As of now, Eurex Clearing is offering the following NDF currency pairs in: 

  • USD/Brazilian Real (BRL)
  • USD/Chilean Peso (CLP)
  • USD/Indian Rupee (INR)
  • USD/Indonesian Rupiah (IDR)
  • USD/Korean Won (KRW)
  • USD/Taiwan Dollar (TWD)

NDF transactions will be cash-settled in USD using the payment infrastructure of Eurex Clearing.

NDF trades can be submitted to Eurex Clearing on any Eurex Clearing business day from 08:00 am until 10:00 pm Frankfurt time via one of the following Approved Trade Sources (ATS): 

  • 360T
  • Traiana 
  • TradeServ

A key characteristic with respect to NDFs is the handling of disruption events. The newly drafted Clearing Conditions foresee provisions with respect to the following disruption events: 

  • Price Source Disruption
  • Unscheduled Holiday/Cumulative Events
  • Permanent Settlement Rate Option Discontinuation
  • Currency Replacement
  • Rate Correction

With respect to the fallback options applicable to each of the afore-mentioned disruption events, Eurex Clearing follows the market standards defined by EMTA in the relevant EMTA Currency Templates or by ISDA as defined in the 1998 ISDA Definitions (if applicable). 

PLEASE NOTE: This Circular only relates to the implementation of the NDF Clearing Service into the legal framework of Eurex Clearing. The actual go-life of the NDF Clearing Service remains subject to the receipt of the regulatory approval by the German Federal Financial Services Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin). Eurex Clearing will publish the precise go-live date in a separate Circular after receipt of the approval by BaFin. 

To implement the NDF Clearing Service into the legal framework of Eurex Clearing, the following documents will be amended as outlined in the attachments:

  • Chapter I of the Clearing Conditions as outlined in Attachments 1 and 4,
  • Chapter VIII of the Clearing Conditions as outlined in Attachment 2,
  • Appendix 1 to the Clearing Conditions as outlined in Attachment 3,
  • DM Auction Rules as outlined in Attachment 5
  • Price List as outlined in Attachment 6.

Consultation with respect to the amendments to the Clearing Conditions introduced in Attachment 4 and the amendments to the DM Auction Rules introduced in Attachment 5

Pursuant to Chapter I Part 1 Number 17 of the Clearing Conditions, the proposed changes and amendments to the Clearing Conditions introduced in Attachment 4 and the amendments to the DM Auction Rules introduced in Attachment 5 are subject to a Consultation which will end with the expiry of 8 November 2021.

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.eurex.com/ec-en/ under the following link: 

Find > Forms > Clearing Derivatives > 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 6 December 2021. 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 to the legal framework of Eurex Clearing

As of the effective date, the full version of the amended documents will be available for download on the Eurex Clearing AG website under the following link: 

Rules & Regs > Rules and Regulations > Clearing Conditions

The 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 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 of Eurex Clearing AG.

Attachments

  • 1 – Amended sections of Chapter I of the Clearing Conditions
  • 2 – Amended sections of Chapter VIII of the Clearing Conditions
  • 3 – Amended sections of Appendix 1 to the Clearing Conditions
  • 4 – Amended sections of Chapter I of the Clearing Conditions (DMP-related amendments, subject to Consultation)
  • 5 – Amended sections of the DM Auction Rules (subject to Consultation)
  • 6 – Amended sections of the Price List

Further information

Recipients:

All Clearing Members, Basic Clearing Members, Disclosed Direct Clients of Eurex Clearing AG and vendors 

Target groups:

Front Office/Trading, Middle + Back Office, IT/System Administration, Auditing/Security Coordination

Contact:

client.services@eurex.com

Web:

www.eurex.com/ec-en

Authorized by:

Dmitrij Senko