The following provides a high-level view of what is required to become a Clearing Member at Eurex Clearing.
Eurex Clearing offers four types of clearing membership:
Direct Clearing Membership (DCM)
DCM can clear their own business and those of affiliated DC Market Participants. They may also clear for any undisclosed clients and/or DCs. OTC DCMs may only clear proprietary business.
General Clearing Membership (GCM)
GCM may clear their own business and those of all clients.
FCM Clearing Membership
For clearing of Swap Transactions through Eurex Clearing AG, FCM (Futures Commission Merchant) Clearing Members act as agents on behalf of their FCM Clients (U.S. persons and non-U.S. persons) and, if applicable, for their own account.
ISA Direct Clearing Membership*
ISA Direct Clearing Members clear their own business for OTC or Repo Market acting through a Clearing Agent (CA). An ISA Direct Clearing License may also be granted as an ISA Direct Indemnified Clearing License for Repo Market or an ISA Direct Light License for GC Pooling Transactions only.
*the afore mentioned term (unless otherwise stated) also comprises "ISA Direct Indemnified Clearing Member, ISA Direct Indemnified Clearing License or Indemnifying Clearing Agent.
The Clearing Member should apply for the clearing licenses which cover the products or markets they would like to be active in. We offer licenses for the following markets:
Please find below the main requirements to take into consideration, if you wish to pursue becoming as a Clearing Member for Eurex Derivatives, Eurex OTC IRD Clear, Eurex ITC NDF, Eurex Repo and Deutsche Börse Cash Market. There might be further requirements and/or documentation to be completed depending on the market, products, cash and securities accounts for which a license is applied for.
The main application form is the "Application for the Granting of a Clearing Licence of Eurex Clearing AG", there will be additional forms to complete depending on the cash, securities and settlement accounts you wish to set up.
In terms of legal agreements, there are three main agreements a Clearing Member (CM) will enter into:
Eurex Clearing will also need to carry out know your customer (KYC) checks. Eurex Clearing is able to collect part of the evidences needed for these checks independently.
In order to simplify the KYC review for multiple business relations with Group Deutsche Börse (GDB) entities, submitting the “Letter of Consent” is recommended. The Letter of Consent enables entities of Deutsche Börse Group to share KYC documents between group entities. This decreases the administrative burdens for our customers – e.g. a DC Market Participant of Eurex Clearing and a Eurex Trading Member will only have to provide the KYC documents once to Eurex Clearing AG rather than sending the documentation twice.
If applicants are located in the EAA then usually they will just need to provide a sanctions compliance form and an up-to-date signatory list.
The corner stone of a Clearing House's integrity is the ability to manage the default of its members. Eurex Clearing has put in place a robust default management procedure to deal with such market events. We have a dedicated section of our website if you wish to learn more about our default management procedures, however there are in general three main responsibilities that have to meet to become a Clearing Member as further outlined below.
For ISA Direct Clearing Memberships default management commitments are provided by the Clearing Agent and are described in detail under “ISA Direct Clearing Memberships”.
Default Fund (DF)
Eurex Clearing requests all members to contribute to the default fund which can be provided either in cash (EUR, CHF or GBP) or eligible securities.
DF contributions (DF minimum) are initially provided to Eurex Clearing when a CM applies for their first clearing license. No further minimum contributions are required when applying for additional clearing licenses. DF requirements are continuously monitored. However, it should be noted that due to the dynamic component of the DF calculation, a higher margin requirement due to increased volumes usually results in a request for further contributions.
Eurex Clearing is usually reviewing the DF requirements on a monthly sequence and thus updates the CM's DF contribution requirement to be provided by the CM.
DCM or ISA Direct Clearing Memberships
|Investment Funds, Insurance Pools,|
and Pension Funds using ISA Direct clearing membership
EUR 1 million
EUR 5 million
DMP (Default Management Process) coordinator
Members are required to nominate a DMP coordinator. The DMP coordinator is contacted by Eurex Clearing in case of a default. It is the responsibility of the DMP coordinator to distribute all DMP-related information to the relevant persons within their organisation.
Participation in Auctions
Clearing Members (resp. CA on behalf of its IDCM) also have mandatory bidding obligations in the event of default auction. Please see the relevant section of the website for more information on these obligations.
Eurex Clearing requires a confirmation from the relevant supervisory authority that the company is supervised and that this license covers the provision of credit to customers in relation to transactions and the receipt of collateral as cash or securities (applicable to CMs which act as CM for Disclosed Clients). There might be further regulatory evidences which need to be provided depending on the residence of the applicant.
Eurex Clearing requires proof of the applicant's capital adequacy. Proof is provided by scanned copy of the return the CM would usually provide to its regulator, so providing evidence is a straightforward process.
The capital requirement of Eurex Clearing depends on the market. Capital requirements are additive, for example if the applicant applies for Eurex and OTC IRD GCM clearing licence they must provide proof of EUR 30mn + EUR 30mn = EUR 60mn.
The highest of the below
in mn €
EurexOTC IRD Clear
Eurex OTC NDF Clear
ISA Direct Clearing Memberships
* For Investment Funds, Mutual Funds, Insurance Pools, and Pension Funds capital requirements are based on their assets under management for which, in deviation of the above, a minimum of EUR 100 million is applicable.
** n/a for ISA Direct Light License Holders
*** For FCMs, only Eurex OTC IRD Clear
Clearing Members are required to have the following cash, collateral and technical/operational infrastructure:
As we strive to maintain high qualification levels of clearing firms for reasons of clearing house integrity, it is required to register at least one "Qualified Clearing Staff" (QCS) in the back-office with Eurex Clearing.
The Clearing Member has the following possibilities to provide proof of the qualification of the staff member that shall be in QCS:
Please see the QBO/QCS information memorandum for further details on how to register Qualified Clearing staff and how to book a Clearer Test.
If the Clearing Member is outsourcing its clearing, back office or risk management functions to an Insourcer, either the Clearing Member or the Insourcer has to have a QCS.