Amendments to the Clearing Conditions and to 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 of Eurex Clearing AG (Clearing Conditions) and the FCM Default Rules of Eurex Clearing AG (FCM Default Rules) with respect to the following topic:

• Adjustments to the Default Fund Contribution delivery period 

The amendments are subject to a consultation process (Consultation). The Consultation will end with the expiry of 6 June 2023 (Consultation Period). The planned effective date is 3 July 2023, depending on the outcome of the Consultation which will be communicated in a separate Eurex Clearing circular.

2.   Required action

The amendments outlined in the Attachments are subject to a Consultation which will end with the expiry of 6 June 2023.

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

3.   Details

Adjustments to the Default Fund Contribution delivery period

In accordance with Article 42 of Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR), Eurex Clearing maintains a pre-funded Default Fund to cover losses that exceed the losses to be covered by the margin provided by the relevant Clearing Member.

The Clearing Conditions in their current version foresee that Clearing Members, which have to provide additional Contributions to the Default Fund due to an increased Contribution Requirement, shall do so within five business days. Possible delays in the provision of Default Fund Contribution could lead to inconsistencies between theoretically determined cover-2 requirements and available pre-funded resources. Due to this reason, Eurex Clearing considers a five-day delivery period as too long.

With the contemplated amendment, the five-business day period will be reduced to a one-business day delivery period. Eurex Clearing holds the view that such change is needed to increase the robustness of the Default Fund and to align with the industry standards.

To reflect the amendments as proposed above, Eurex Clearing will amend its rulebooks as outlined in Attachments 1 and 2: 

• Chapter I Part 1 Number 6 of the Clearing Conditions, and
• Number 3 of the FCM Default Rules. 

Consultation with respect to the amendments to the Clearing Conditions

Pursuant to Chapter I Part 1 Number 17 of the Clearing Conditions, the proposed changes and amendments to the Clearing Conditions are subject to a Consultation which will end with the expiry of 6 June 2023.

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 only be submitted through a web-based commenting service for which a registration form is available on the Eurex Clearing website under the following link:

Find > Forms: Consultation Form

The form has to be duly signed and returned to Eurex Clearing via e-mail to SpecialProvisions@eurex.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 to the Clearing Conditions is 3 July 2023. 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 Clearing Conditions and the FCM Default Rules

As of the effective date, the full versions of the amended legal framework of Eurex Clearing will be available for download on the Eurex Clearing website under the following link: 

Rules and Regulations > Eurex Clearing Rules and 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 prior to the relevant effective date(s) as stipulated in this circular. In case of an objection by the respective contractual party pursuant the preceding sentence, Eurex Clearing AG is entitled to terminate the respective contract (including a Clearing Agreement, if applicable). Instead of submitting an objection, the respective contractual party may submit in writing to Eurex Clearing AG comments to any amendments of the legal framework of Eurex Clearing AG within the first 10 Business Days after the publication of the amendments. Eurex Clearing AG shall assess whether these comments prevent the published amendments from becoming effective taking into account the interests of Eurex Clearing AG and all contractual parties.

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:

Updated sections of the following rules and regulations:

• 1 – Chapter I Part 1 Number 6 of the Clearing Conditions of Eurex Clearing AG
• 2 – Number 3 of the FCM Default Rules of Eurex Clearing AG

Further information