Default Handling under ISA Direct Model

General overview

Under the Basic Clearing Member Provisions, the occurrence of a Termination Event or an Insolvency Termination Event with respect to a Clearing Agent does not necessarily lead to the termination of the relevant Basic Clearing Member Transactions as the affected Basic Clearing Member Standard Agreement (including all Basic Clearing Member Transactions thereunder) is directly established between Eurex Clearing and the relevant Basic Clearing Member. In general, each Basic Clearing Member may choose between the three following options:

  1. to continue the Clearing of all Transactions under the Basic Clearing Member Standard Agreement with a Replacement Clearing Agent ("Replacement Election") or
  2. to continue the Clearing of its Transactions ("DCM Election") or 
  3. to terminate and close-out its Transactions ("Termination Election"). 

Upon the occurrence of an (Insolvency) Termination Event and a Termination Date regarding a Clearing Agent or if Eurex Clearing published a Replacement Notice:

  • the Clearing of new Basic Clearing Member Transactions is suspended, 
  • all Redelivery Claims of the Affected Basic Clearing Members with respect to Basic Clearing Member Margin in the form of cash and Basic Clearing Member Variation Margin are be deferred, and, 
  • Eurex Clearing will not provide any Basic Clearing Member Variation Margin to the Affected Basic Clearing Members.
  • Eurex Clearing will refrain from paying any amounts owed to the Basic Clearing Member to any Basic Clearing Member Cash Account that is held by the Clearing Agent and instead pay such amounts to any account of the Basic Clearing Member notified by the Basic Clearing Member to Eurex Clearing AG from time to time.

For Basic Clearing Members that use their own accounts in daily business, there can be an extension of the replacement period until T+5 13:00 CET. 

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