The main reason for segregation is the separation of Collaterals in case of a Clearing Member default. Eurex Clearing offers a variety of Segregation Models to address the needs of different client types.
There are three types of accounts:
Net Omnibus Segregated Account (NOSA)
Gross Omnibus Segregated Account (GOSA)
Individual Segregated Account (ISA)
The main criteria to decide on the required level of segregation are:
Net Omnibus SegregatedAccounts have the highest Margin efficiency stemming from the fact that positions of several clients are commingled and netted within one account.
However, this Segregation Model also incurs the highest fellow customer risk.
Individually SegregatedAccounts have no fellow customer risk as both the positions and the assets of the client are separated from both Clearing Member's assets and of his other clients.
Gross Omnibus Segregated Accounts offer only a limited protection from fellow customer risk as the Collateral Pool is shared with other clients.
Client Asset Protection (CAP) under EMIR service of Eurex offers the possibility for clients to port to a Replacement Clearing Member and continue clearing activities even after their Clearing Member defaults.
ISA Direct Model combines elements of a direct clearing membership and the traditional service relationship in client clearing - tailored specifically for the buy side.
It opens up a new principal client relationship between buy side clients and the CCP, with the regular Clearing Member acting as a ‘Clearing Agent’, providing a variety of mandatory and optional service functions.