Default Handling under ISA Direct Model

Mandatory prerequisites

The transfer of transactions and collateral of a Basic Clearing Member to a Replacement Clearing Agent is operationally close to the process of a regular Clearer Change. In addition to the fulfilment of the Replacement Requirements, the Replacement Clearing Agent must provide certain forms/documents to ensure the set-up and migration. 

In addition to the fulfilment of the Replacement Requirements, the upgrade from a Basic Clearing Member to a Direct Clearing Member (including a change of the Member ID) requires the provision of certain forms/ documents to ensure the set-up and migration. 

Eurex Clearing highly recommends getting in touch with the relevant Key Account Manager in order to discuss the individual implications. In the following, there is only a selection of required forms and documents or further steps to be considered.

Please consider submitting the following forms/documents:

  • Clearing Agent Limitation Notice
  • Segregation Set-Up Sheet
  • Static Data
  • Pledge Agreement

The following requirements have to be fulfilled by the end of the Replacement Period: 

Continue Clearing with a Replacement Clearing Agent

If the relevant Basic Clearing Member opts to continue the Clearing of its Basic Clearing Member Transactions with a Replacement Clearing Agent, the Basic Clearing Member and the Replacement Clearing Agent need to fulfil the Clearing Agent Replacement Requirements prior to the expiry of the Replacement Period. 

From a legal perspective, the replacement of the Clearing Agent is achieved by simultaneously entering into a new Basic Clearing Member Clearing Agreement with the Replacement Clearing Agent and the (automatic) termination of the Basic Clearing Member Clearing Agreement established with the (defaulting) Clearing Agent. 

It is the responsibility of the relevant Basic Clearing Member and the Replacement Clearing Agent to fulfil the following requirements prior to the expiry of the relevant Replacement Period.


To be fulfilled by the Basic Clearing Member


Required activitiesRelated document template

Provide Election Notice

Election Notice

Election Notice (Authorised Manager)

One of the two following options:

(i) The Replacement Clearing Agent and the Basic Clearing Member have entered into a Basic Clearing Member Clearing Agreement (Appendix 10 to Clearing Conditions), or

(ii) have agreed in form and substance satisfactory to Eurex Clearing to already be bound by the provisions set out in the form of the Basic Clearing Member Clearing Agreement appended to the Clearing Conditions as Appendix 10 and to execute a Basic Clearing Member Clearing Agreement no later than five (5) Business Days after the end of the Replacement Period.



Appendix 10


Basic Clearing Member Declaration regarding Clearing Agent Replacement Requirements

Basic Clearing Member Declaration regarding Clearing Agent Replacement Requirements (Authorised Manager)

The Replacement Clearing Agent and the Basic Clearing Member have agreed in form and substance satisfactory to Eurex Clearing that this Basic Clearing Member Clearing Agreement shall cover all Basic Clearing Member Transactions which are booked on the Basic Clearing Member Own Account of the Basic Clearing Member at the end of the Replacement Period, or at such earlier time at which Eurex Clearing determines that the Clearing Agent Replacement Requirements are satisfied  Supplement Agreement to the Basic Clearing Member Clearing Agreement

One of the following options:

The Basic Clearing Member 

(i) has provided Eurex Clearing AG with sufficient Eligible Margin Assets to cover Basic Clearing Member Margin and Basic Clearing Member Variation Margin in respect of all Basic Clearing Member Transactions to which the Replacement relates, or

(ii) committed itself in form and substance satisfactory to Eurex Clearing to provide the relevant amount of Eligible Margin Assets without undue delay following the Replacement, for which purposes all Eligible Margin Assets actually delivered prior to such Replacement shall also be taken into account.





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Basic Clearing Member Declaration regarding Clearing Agent Replacement Requirements

Basic Clearing Member Declaration regarding Clearing Agent Replacement Requirements (Authorised Manager)


To be fulfilled by the Replacement Clearing Agent


Required activitiesRelated document template
The Replacement Clearing Agent is a Clearing Member that meets the admission criteria for Clearing Agents pursuant to Chapter I Part 6 Number 2.2 of the Clearing Conditions. 

None

One of the two following options:

The Replacement Clearing Agent and the Basic Clearing Member

(i) have entered into a Basic Clearing Member Clearing Agreement (Appendix 10 to Clearing Conditions), or

(ii) have agreed in form and substance satisfactory to Eurex Clearing to already be bound by the provisions set out in the form of the Basic Clearing Member Clearing Agreement appended to the Clearing Conditions as Appendix 10 and to execute a Basic Clearing Member Clearing Agreement no later than five (5) Business Days after the end of the Replacement Period.





Appendix 10


Basic Clearing Member Declaration regarding Clearing Agent Replacement Requirements

Replacement Clearing Agent Declaration regarding Clearing Agent Replacement Requirements (Authorised Manager)


The Replacement Clearing Agent and the Basic Clearing Member have agreed in form and substance satisfactory to Eurex Clearing that this Basic Clearing Member Clearing Agreement shall cover all Basic Clearing Member Transactions which are booked on the Basic Clearing Member Own Account of the Basic Clearing Member at the end of the Replacement Period, or at such earlier time at which Eurex Clearing determines that the Clearing Agent Replacement Requirements are satisfied  Supplement Agreement to the Basic Clearing Member Clearing Agreement
The Replacement Clearing Agent has made the Contribution to the Default Fund with respect to its capacity as the Clearing Agent of the Basic Clearing Member.

None

If the Clearing Agent Replacement Requirements are not fulfilled by the end of the Replacement Period, the relevant Basic Clearing Member Standard Agreement (including all Basic Clearing Member Transactions thereunder) shall terminate automatically (Chapter I Part 6 Numbers 11.2.5 and 11.3.2 of the Clearing Conditions). 

Continue Clearing as Direct Clearing Member

In case the relevant Basic Clearing Member decides to continue the clearing of its Basic Clearing Member Transactions as Direct Clearing Member, it needs to submit a Basic Clearing Member Election Notice making the DCM Election to Eurex Clearing AG and to fulfil the DCM Requirements.

If the DCM Requirements are fulfilled prior to the expiry of the Replacement Period, the Basic Clearing Member Transactions under the relevant Basic Clearing Member Standard Agreement between the Basic Clearing Member and Eurex Clearing will be terminated and new corresponding Own Transactions will be established between Eurex Clearing and the Direct Clearing Member (the former Basic Clearing Member) under the Elementary Proprietary Standard Agreement. Such position transfer is legally achieved via novation.

It is the responsibility of the Basic Clearing Member to fulfil the following:

Required activitiesRelated document template

Provide Election Notice

Election Notice

Election Notice (Authorised Manager)

The Basic Clearing Member meets the admission criteria for Direct Clearing Members pursuant to Chapter I Part 1 Number 2 of the Clearing Conditions and has provided evidence thereof to the satisfaction of Eurex Clearing.

None

The Basic Clearing Member has agreed with Eurex Clearing in writing to act as Direct Clearing Member in form and substance satisfactory to Eurex Clearing.

Basic Clearing Member Declaration regarding DCM Requirements

Basic Clearing Member Declaration regarding DCM Requirements (Authorised Manager)

One of the following options:

The Basic Clearing Member

(i) has entered into a Clearing Agreement pursuant to Appendix 1 with Eurex Clearing; or

(ii) has agreed in form and substance satisfactory to Eurex Clearing to already be bound by the provisions set out in the Clearing Agreement in the form appended to the Clearing Conditions as Appendix 1 and to execute such Clearing Agreement no later than five (5) Business Days after the end of the Replacement Period.





Appendix 1


Basic Clearing Member Declaration regarding DCM Requirements

Basic Clearing Member Declaration regarding DCM Requirements (Authorised Manager)


One of the following options:

The Basic Clearing Member

(i) (acting as Direct Clearing Member) has provided Eurex Clearing with sufficient Eligible Margin Assets to cover Margin and Variation Margin in respect of all Transactions to which the Replacement relates; or

(ii) committed itself to provide the relevant amount of Eligible Margin Assets without undue delay following the Replacement, for which purposes all Eligible Margin Assets actually delivered prior to such Replacement shall be taken into account.





None



Basic Clearing Member Declaration regarding DCM Requirements

Basic Clearing Member Declaration regarding DCM Requirements (Authorised Manager)

The Basic Clearing Member has made the Contribution to the Default Fund with respect to its capacity as the new Direct Clearing Member.

None

 If the DCM Requirements are not fulfilled by the end of the Replacement Period, the relevant Basic Clearing Member Standard Agreement (including all Basic Clearing Member Transactions thereunder) shall terminate automatically (Chapter I Part 6 Numbers 11.2.5 and 11.3.2 of the Clearing Conditions). 

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