Repo Transactions: Admission of U.S. Broker-Dealers as Direct Clearing Members for the clearing of Repo Transactions

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 Price List of Eurex Clearing AG (Price List) regarding the admission of U.S. Broker-Dealers as Direct Clearing Members for the clearing of Repo Transactions.

The amendments shall become effective on 13 June 2023.

In addition, Eurex Clearing introduces a fee waiver with respect to the Clearing License fees for U.S. Broker-Dealers from 13 June 2023 until 13 June 2024.

2.   Required action

Clearing Members, ISA Direct Clearing Members, Disclosed Direct Clients, FCM Clearing Members, vendors and other affected contractual parties should take the amendments to the Clearing Conditions into consideration.

3.   Details of the initiative

Eurex Clearing will extend the clearing offering with respect to Eurex Repo Transactions to U.S.-based entities, which are registered with the U.S. Securities and Exchange Commission (SEC) as broker-dealers in accordance with Section 15 (b) of the U.S. Securities Exchange Act.

The clearing offering for U.S. Broker-Dealers is limited to clearing of proprietary transactions. Further, U.S. Broker-Dealers shall not be allowed to clear Repo Transactions relating to an underlying security, which the SEC considers to be a "U.S. security" for purposes of Section 17A of the U.S. Securities Exchange Act. 

With respect to entering into Eurex Repo Transactions via Eurex Repo GmbH by U.S. Broker-Dealers, such Eurex Repo Transactions can only be executed via the so-called “pre-arranged functionality” or the “request-for-quote" functionality with “view-only access” to Eurex Repo GmbH’s Central Limit Orderbook (CLOB). A direct market access for U.S. Broker-Dealers to Eurex Repo GmbH’s CLOB cannot be offered.

Initial Margin as well as the Default Fund Contribution can only be provided in the form of cash.

To promote the admission of U.S. Broker-Dealers for Repo Transactions, Eurex Clearing will offer a temporary fee waiver with respect to the Clearing Licenses fees. The temporary fee waiver will be effective from 13 June 2023 until 13 June 2024. In addition, Eurex Clearing waives the Settlement Bank Fee with respect to U.S. Broker-Dealers.

To reflect the changes, the following provisions will be amended as outlined in the Attachments 1 and 2:

• Chapter I Part 1 Numbers 1.16, 2.5 and 2.6 of the Clearing Conditions;
• Number 9.1 (6) of the Price List.

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

• 1 – Chapter I Part 1 Numbers 1.16, 2.5 and 2.6 of the Clearing Conditions of Eurex Clearing AG
• 2 – Number 9.1 (6) of the Price List of Eurex Clearing AG

Further information