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04 Jul 2022

Eurex Clearing

Amendments to the Clearing Conditions of Eurex Clearing AG and other related documents

Eurex Clearing Circular 048/22 Amendments to the Clearing Conditions of Eurex Clearing AG and other related documents

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) and other related documents regarding the following topics:

A.    Amendments due to the reclassification of US OTC Clearing Members as Direct Clearing Members  

B.    Amendments to the “US Person” definition

C.    Clarifying amendments to the Clearing Conditions with regards to several topics.

The amendments will become effective as of 1 August 2022

2.  Required action

There is no required action. 

3.  Details of the initiative

A.    Amendments due to the reclassification of US OTC Clearing Members as Direct Clearing Members

When the role of US OTC Clearing Members (US OTC CMs) was introduced, the category of Direct Clearing Members (DCM) had not existed yet. As a consequence, an US OTC Clearing Member was automatically categorized as a General Clearing Member (GCM) and its entitlements were explicitly restricted under the definition of a GCM.

As the categorization of DCM has successfully been implemented in the meanwhile, US OTC CMs shall be setup as DCMs. Thus, the restrictions under the respective description of a GCM with regards to US OTC CMs shall be deleted from the Clearing Conditions. 
To reflect these amendments, the following provisions will be amended as outlined in Attachment 1:

  • Chapter I Part 1 Number 2.1.1 (4) of the Clearing Conditions of Eurex Clearing AG

B.    Amendments to the “US Person” definition

To ensure that clearing for clients qualifying as “US Person” is conducted under the LSOC-compliant FCM Regulations, Eurex Clearing requires its Clearing Members to represent to Eurex Clearing that neither the Clearing Members nor any of their clients fall under one of the “US Person Categories” defined by the CFTC.

Currently, Eurex Clearing is only referring to the “Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations” (78 Fed. Reg. 45,292, Jul. 26, 2013) by the CFTC with regards to “US Person Categories”.

In 2020, the CFTC introduced further categories in the “Cross-Border Application of the Registration Thresholds and Certain Requirements Applicable to Swap Dealers and Major Swap Participants” (85 Fed. Reg. 56,924, Sept. 14, 2020). The 2020 Rules note that the 2013 Guidance can still be used until 2027.

In case of fund manager setups with the fund manager being located in the US, Eurex Clearing further requires the Clearing Member to sign the attached confirmation letter. By signing this confirmation letter, the relevant Clearing Member represents to Eurex Clearing that it has either obtained a representation from the fund manager, or has analyzed itself that all funds for which it acts as fund manager do not fall under one of the US Person Categories defined by the CFTC. 

As a consequence of the introduction of further “US Person Categories” by the CFTC, Eurex Clearing intends to amend the Clearing Conditions and the Confirmation Letter accordingly. The Confirmation Letter is available via your Key Account Manager.

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

  • Chapter I Part 1 Number 1.8 and 1.9 of the Clearing Conditions 
  • OffshoreFund_USPerson_ConfirmationLetter

C.    Clarifying amendments to the Clearing Conditions with regards to several topics

Some provisions of the Clearing Conditions still contain references to the decommissioned Individual Clearing Model (ICM) which are now without function. 

These references will be removed with this amendment. Furthermore, in the context of the Third-Party CM Account Holder setup, it is clarified that a Third-Party CM Account Holder needs to qualify as a ‘participant’ in the system operated by Eurex Clearing AG within the meaning of Art. 1 (f) of the Settlement Finality Directive (unless waived by Eurex Clearing AG). Besides that, a reference to a Clearing Member in Part 2 Subpart A (currently referring to a Clearing Member as “Clearing Clearing Member“) is corrected.

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

  • Chapter I Part 1 No. 1.1, 1.8, 3.6, 11 and 12.1
  • Chapter I Part 2 Subpart A No. 4.6

The amendments with regards to topics A. to C. will become effective on 1 August 2022. As of the effective date, the full versions of the amended legal framework of Eurex Clearing, as specified under items A. to C., will be available for download on the Eurex Clearing website www.eurex.com/ec-en/ under the following link: 

Rules & Regulations > Eurex Clearing Rules & Regulations 

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: (Attachment 2b is available via your Key Account Manager):

1. Amended sections of Chapter I Part 1 Number 2.1.1 (4) of the Clearing Conditions corresponding to topic A

2 a. Amended sections of Chapter I Part 1 Number 1.8 and 1.9 of the Clearing Conditions corresponding to topic B

2 b. Amended sections of the “OffshoreFund_USPerson_ConfirmationLetter” corresponding to topic B

3. Amended sections of Chapter I Part 1 No. 1.1, 1.8, 3.6, 11 and 12.1 and amended sections of Chapter I Part 2 Subpart A No. 4.6 corresponding to topic C
 

Further information

Recipients:

All Clearing Members, Basic Clearing Members, Disclosed Direct Clients and 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@eurex.com

Web:

www.eurex.com/ec-en/

Authorized by:

Dmitrij Senko