Amendments to the Clearing Conditions and the FCM Default Rules of Eurex Clearing AG - 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 and the FCM Default Rules regarding the following topics:

A. Inclusion of the requirements for proof of own fund requirements for entities subject to Directive (EU) 2019/2034 (IFD) and the Regulation (EU) 2019/2033 (IFR)

B. Amendments to the Clearing Conditions in the context of re-design of the Eurex Clearing website

C. Amendments to Chapter IV of the Clearing Conditions in the context of the migration of the collateral management system for GC Pooling Repo Transactions from Xemac to CmaX

D. Deletion of the clause from the FCM Default Rules stipulating that the calculation methodology for Default Fund Contributions published on Eurex Clearing’s website forms part of the FCM Default Rules of Eurex Clearing

The amendments regarding item A. 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 26 November 2021. The planned effective date of these amendments is 3 January 2022, depending on the outcome of the Consultation which will be communicated in a separate Eurex Clearing circular.

The amendments under B., C. and D. will become effective as of 1 December 2021.

2.  Required action

The amendments under A. are subject to a Consultation which will end with the expiry of 26 November 2021.

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

Clearing Members with a Repo Clearing License or a Specific Repo License and participating in the Clearing of GC Pooling Repo Transactions should contact their Relationship Manager and trigger the steps required for the GC Pooling migration including the necessary account opening process with Clearstream. As of 21 October 2022, Xemac will no longer be available. Thus, the new CmaX set-up must be fully tested well in advance before such date as will be separately announced as Final Implementation Date at a later point in time. 

3.  Details of the initiative

A.    Inclusion of requirements for proof of own fund requirements for entities subject to Directive (EU) 2019/2034 (IFD) and the Regulation (EU) 2019/2033 (IFR)

The European Commission developed IFD and IFR to differentiate between the business model and respective risk profile of investment firms in contrast to credit institutions. Entities subject to IFD and IFR shall provide Eurex Clearing with proof of own fund requirements subject to IFD and IFR.

To reflect these amendments, the following provisions of the Clearing Conditions will be amended as outlined in Attachment 1:

• Chapter I Part 1 Number 2.1.2 and 7.2.1 (7) 

Consultation with respect to the inclusion of requirements for proof of own fund requirements for entities subject to Directive (EU) 2019/2034 (IFD) and the Regulation (EU) 2019/2033 (IFR) (Item A.)

Pursuant to Chapter I Part 1 Number 17 of the Clearing Conditions, the proposed changes to provide proof of own fund requirements for entities subject to Directive (EU) 2019/2034 (IFD) and the Regulation (EU) 2019/2033 (IFR) as outlined in Attachment 1 are subject to a Consultation which will end with the expiry of 26 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

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 3 January 2022. 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.

B.    Amendments to the Clearing Conditions in the context of re-design of the Eurex Clearing website

As the Eurex Clearing website as well as the address was changed as part of the rebranding, some references in the legal framework of Eurex Clearing to its website need to be updated.

To reflect these amendments, the following provisions of the Clearing Conditions will be amended as outlined in Attachment 2:

• Chapter I Part 1 Number 8.1
• Chapter I Part 1 Number 8.2
• Chapter I Part 1 Number 15.2.4 (6)
• Chapter I Part 2 Subpart A Number 4.4.1
• Chapter I Part 4 Number 8.7

C.    Amendments to Chapter IV of the Clearing Conditions in the context of the migration of the collateral management system for GC Pooling Repo Transactions from Xemac to CmaX

Eurex Clearing amends the Clearing Conditions in the context of the migration of the collateral management system for GC Pooling Repo Transactions from Xemac (current system of Clearstream Banking AG, Frankfurt (CBF)) to CmaX (current system of Clearstream Banking S.A., Luxemburg, (CBL) and which will be in the future the single collateral management system of CBF and CBL (Clearstream)). 

Documentation, circulars, timeline and much more about C7 SCS Release 2.0 is available on our dedicated initiative page under the following link: Support > Initiatives & Releases > C7 SCS Releases.

Clearstream requires a new account structure for settlement of GC Pooling Repo Transactions in CmaX. Clearstream has already published the preliminary release notes to enable customers to be prepared for these changes and are available at the following links:

Collateral Mobility: Preliminary Release Notes (CBF Legacy)

Collateral Mobility: Preliminary Release Notes (CBL)

Chapter IV Part 1, Part 2 and Part 3 of the Clearing Conditions have been amended in general to cover GC Pooling migration aspects. 

Additionally, a new section Number 1.5 (Changes to Settlement and Collateral Management Infrastructure) has been added to Chapter IV Part 1 of Clearing Conditions to cover in particular the following changes:

• The handling of Non-Compliant Clearing Members (i.e. which fail to deliver the requested new account set up and the required relevant legal documentation thereto in due time) by Eurex Clearing is described. Eurex Clearing is entitled to terminate and close (accelerate) the outstanding GC Pooling Repo Transactions with such Non-Compliant Clearing Members in case the orderly settlement can not be guaranteed.
• It is described that on Friday before the migration weekend, i.e. 21 October 2022, settlement of GC Pooling Repo Transactions with Eurex Clearing will not be available (settlement holiday). The details can be found in Eurex Clearing Circular 066/21.

To reflect these amendments, the following provisions of the Clearing Conditions will be amended as outlined in Attachment 3:

• Chapter IV Preamble, Part 1 General Provisions, Numbers 1.1.2, 1.2, 1.3, 1.5; Part 2 Numbers 2.1, 2.1.1, 2.1.2, 2.2, 2.3, 2.4, 2.5, 2.11; Part 3 Numbers 3.1, 3.2.2, 3.3, 3.4, 3.5.1, 3.5.4, 3.8, 3.10 

D.    Deletion of the clause from the FCM Default Rules stipulating that the calculation methodology for Default Fund Contributions published on Eurex Clearing’s website forms part of the FCM Default Rules of Eurex Clearing

Effective 3 August 2020, the Clearing Conditions of Eurex Clearing AG have been amended to remove the clause stipulating that the calculation methodology for Contributions to the Default Fund published on the website forms part of the Clearing Conditions. The change was introduced to shorten the governance process for changes to the calculation methodology and allow more timely reaction to unforeseen market conditions such as the emergence of the Covid-19 pandemic. While the amendment has been implemented in Chapter I Part 1 Number 6.1.1 of the Clearing Conditions of Eurex Clearing AG, the FCM Default Rules of Eurex Clearing AG still contain a respective clause.

To align the legal framework for all jurisdictions, the FCM Default Rules of Eurex Clearing AG shall be amended to remove the clause stipulating that the calculation methodology for Contributions to the Default Fund published on the website forms part of the FCM Default Rules of Eurex Clearing.

Other steps of the governance process for model changes regarding the clearing offering under the FCM Regulations remain unchanged.

To reflect the amendment, the following provision of the FCM Default Rules of Eurex Clearing AG shall be amended as outlined in Attachment 4:

• Number 3.1.1

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 website www.eurex.com/ec-en/ 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 or FCM Clearing Conditions of Eurex Clearing AG, as applicable.

Attachments:

• 1 – Chapter I Part 1 Number 2.1.2 and 7.2.1 (7) of the Clearing Conditions
• 2 – Chapter I Part 1 Number 8.1, Chapter I Part 1 Number 8.2, Chapter I Part 1 Number 15.2.4(6), Chapter I Part 2 Subpart A Number 4.4.1, Chapter I Part 4 Number 8.7 of the Clearing Conditions
• 3 - Chapter IV Preamble, Part 1 General Provisions, Numbers 1.1.2, 1.2, 1.3, 1.5; Part 2 Numbers 2.1, 2.1.1, 2.1.2, 2.2, 2.3, 2.4, 2.5, 2.11; Part 3 Numbers 3.1, 3.2.2, 3.3, 3.4, 3.5.1, 3.5.4, 3.8, 3.10 of the Clearing Conditions
• 4 - Number 3.1.1 of the FCM Default Rules

Further information