Eurex Clearing
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 Regulations of Eurex Clearing AG (FCM Regulations) regarding the following topics:
A. Amendments to the (non-automatic) Termination Events
B. Alignment of disclosure rights in case of a Clearing Suspension
C. Amendments to the exemptions provisions regarding Public Entities
D. Amendments to the creditworthiness requirement regarding Public Entities, and
E. Alignment of the applicable transfer regime under German law with respect to WR Credits (Gutschriften in Wertpapierrechnung) under the ISA Provisions
The amendments to the Clearing Conditions under item A. are subject to a consultation process (Consultation). The Consultation will end with the expiry of 6 March 2024 (Consultation Period). The planned effective date of these amendments is 1 April 2024, depending on the outcome of the Consultation which will be communicated in a separate Eurex Clearing circular.
The planned effective date of the amendments to the FCM Regulations under item A. is 1 April 2024, depending on the outcome of the Consultation with respect to the Clearing Conditions relating to item A. The final effective date will be communicated in the same separate Eurex Clearing circular.
The amendments under items B., C., D. and E. will become effective as of 1 March 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.
The amendments to the Clearing Conditions regarding topic A. are subject to a Consultation, which will end with the expiry of 6 March 2024.
Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.
3. Details
A. Amendments to the (non-automatic) Termination Events
Eurex Clearing has defined non-automatic Termination Events in the Clearing Conditions and the FCM Regulations, which entitle Eurex Clearing to exercise a termination right.
There are minor amendments introduced to the “Termination Events” with the main objective to remove outdated and unprecise terminology to further improve the clarity of the respective provisions. Please note that the main purpose of the provisions shall not be changed and no additional termination events shall be introduced.
The amendments relate to the following Termination Events enumerated under Chapter I Part 1 Number 7.2.1 of the Clearing Conditions and Chapter I Number 9.2.1 of the FCM Regulations:
i. Termination Event: (5) Insolvency related Events
The current catalogue of insolvency related events applicable to non-German Clearing Members is rather inaccurate referring to terms (i.e. “winding-up”, “bankruptcy”, “liquidation”, “administration” etc.), which in many foreign jurisdictions would rather constitute an actual insolvency case.
Further, a clarification was needed with respect to the ISA Direct Light Clearing Model to achieve a consistent application with respect to German and Non-German ISA Direct Light License Holders.
ii. Termination Event: (7) Regulatory Actions
The event shall be renamed to “(7) Regulatory Moratorium” and shall only cover scenarios in which an administrative order, court ruling, legal act or any other action is issued by a regulatory authority, court, or administrative body with respect to a Clearing Member that constitute the imposition of a moratorium (or a similar measure) resulting in a (temporary) ban on payments or other disposals by such Clearing Member.
Previously mentioned measures taken in accordance with the German Banking Act (KWG) and the German Securities Institution Act (WplG) are already captured by the non-automatic termination event “(6) Violation of Regulatory Provisions”, which shall further remain unchanged.
iii. Termination Event: (8) Application or Commencement of Restructuring Measures
The event shall be renamed to “(8) Restructuring Proceedings and Measures”. The current provision is referring to the German transposition of Directive (EU) 2019/1023 on restructuring and insolvency, which is applicable only to corporates.
Thus, the provision shall be amended to include restructuring/reorganization proceedings based on other laws as well so that the application scope is extended to all Clearing Members’ types and not only corporates. For the avoidance of doubt this shall not relate to any recovery or resolution measures or proceedings.
iv. Termination Event: (10) Non-Compliance with Outsourcing Requirements
The event shall be deleted since it is already captured by Termination Event “(2) Failure to comply with Clearing Conditions”.
To reflect the amendments, the following provisions shall be amended as outlined in Attachments 1 and 2:
B. Alignment of disclosure rights in case of a Clearing Suspension
Currently, Eurex Clearing is not entitled to inform its Markets and CSDs about the issuance of a Clearing Suspension due to reasons, which do not qualify as Termination Events (see events under Chapter I Part 2 Subpart A No 6.2.1 (i) to (v) of the Clearing Conditions.
Such disclosure rights are now included for all Clearing Models under the Clearing Conditions and the FCM Regulations.
To reflect the amendment, the following provisions shall be amended as outlined in Attachments 3 (Clearing Conditions) and 4 (FCM Regulations):
C. Amendments to the exemptions provisions regarding Public Entities
Chapter I Part 1 Number 2.1.3 (1) of the Clearing Conditions provides Eurex Clearing with the right to exempt Public Entities from certain obligations under the Clearing Conditions.
Purpose of the amendments is to align the wording of the Clearing Conditions with the corresponding provisions under Article 1 paras. (4) and (5) of EMIR (European Market Infrastructure Regulation).
Content-wise, the amendments are not intended to lead to any changes.
To reflect the changes, the following provision shall be amended as outlined in Attachment 3:
D. Amendments to the creditworthiness requirement regarding Public Entities
Chapter I Part 1 Number 2.1.3 (3) of the Clearing Conditions defines a specific creditworthiness requirement for the granting of exemptions for Public Entities.
Currently, the creditworthiness of the relevant Public Entity is determined based on Eurex Clearing's internal credit assessment which needs to correspond – at least – to a rating of A by Standard & Poor’s Financial Services LLC (S&P). However, such minimum rating deviates from the minimum requirements stipulated by the Capital Requirements Regulation (CRR), which provides for a zero-risk weighting for Public Entities with a credit rating of at least AA-.
Eurex Clearing intends to amend the minimum internal credit rating equivalent to AA- by S&P.
To reflect the changes, the following provision shall be amended as outlined in Attachment 3:
E. Alignment of the applicable transfer regime under German law with respect to WR Credits (Gutschriften in Wertpapierrechnung) under the ISA Provisions
In 2021, Eurex Clearing amended the legal basis for the transfer of title in WR Credits (Gutschriften in Wertpapierrechnung) in the relevant parts of the Clearing Conditions.
Instead of the transfer of a claim for surrender against the relevant CSD, Eurex Clearing followed the dominant view in German legal literature according to which the transfer of WR Credits (Gutschriften in Wertpapierrechnung) is achieved by debit and credit entries in the relevant securities accounts.
Eurex Clearing missed to change the transfer provisions reg. WR Credits (Gutschriften in Wertpapierrechnung) under the ISA Provisions (Chapter I Part 4 of the Clearing Conditions).
With this change, Eurex Clearing aligns the transfer provisions within the entire Clearing Conditions.
To reflect the changes, the following provision shall be amended as outlined in Attachment 3:
Consultation with respect to the proposed amendments to the Clearing Conditions under item A.
Pursuant to Chapter I Part 1 Number 17 of the Clearing Conditions, the proposed changes and amendments to the Clearing Conditions regarding topic A.) are subject to a Consultation which will end with the expiry of 6 March 2024.
Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.
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 www.eurex.com/ec-en/ 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 1 April 2024. 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 as outlined under items A. to E.
As of the effective date, the full version of the amended Clearing Conditions and FCM Regulations 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:
Further information
Recipients: | All Clearing Members, ISA Direct 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 + Back Office, IT/System Administration, Auditing/Security Coordination | |
Contact: | client.services@eurex.com | |
Web: | www.eurex.com/ec-en/ | |
Authorized by: | Jens Janka |
