Principles

Collateral Trading

Broad variation of trading behaviour: private, semi-private and public quotes with access to a large market of European shares, ETFs and bonds.

Fully integrated Value Chain

Straight Through Processing (STP) from trading to settlement. Traders can monitor the loan in real-time at all times, no manual intervention needed. Central clearing (novation) and risk management via Eurex Clearing.

Crossborder Settlement to major I-CSD's and CSD's

For Equities as loan securities, Central Securities Depositories (CSDs) act for home market settlement. Fixed Income loan securities are settled via the International Central Securities Depositories (ICSDs). For non-cash collateral a membership of a tri-party collateral agent (Clearstream Banking Luxembourg or Euroclear Bank) is mandatory.

Minimum Trade Size

The minimum trade sizes for the respective financial instruments tradeable on SecLend Market are as follows:

Settlement

• Equities: via home market Settlement: Clearstream Banking Frankfurt (CBF), SIX SIS AG, ESES, EUI
• Fixed Income: Clearstream Banking Luxembourg, Euroclear Bank

Trade Entry Cut-Off Times on Same Day Loans

Trading Hours

07:30 a.m. to 6:00 p.m. CET (supported 07.00 a.m. to 07.30 p.m. CET).

Trading Fees

Market Concept

The SecLend Market with CCP ensures straight-through processing (STP) from trading to settlement and the integrated service of Eurex Clearing as a central counterparty.

Participation

Advantages for Participation

• Discretionary market visibility, increased trading speed, reduced operational and systemic risk, reduced reconciliation effort, corporate action service included
• Reduction of counterparty risk exposure
• Elimination of multiple credit evaluations
• Significant reduction in capital allocation (Basel II / Basel III)
• Access to all other Eurex Repo securities funding and financing markets within the same infrastructure

Participation Requirements

A Participation Authorization can be granted for the Euro Repo, GC Pooling Market and/or SecLend Market with CCP.
If the customer is already Eurex Repo and/or GC Pooling participant, the additional registration for SecLend Market with CCP can take place under the prerequisite that one of the following Clearing Licenses of Eurex Clearing was granted:

• General Clearing Member Securities Lending (GCM)
• Direct Clearing Member Securities Lending (DCM)
• Specific Lender License (only pledge of collateral securities and only if no other „Full Clearing Member License“ has been granted)

"Full Clearing Member” License must be fulfilled for a GCM/DCM Securities Lending: Liable Equity Capital Requirements of € 200 Mio (GCM) or € 50 Mio (DCM).

Admission Prerequisites Specific Lender License

• The enterprise must be licensed as a
  • Credit Institution
  • Financial Institution
  • or as an USCITS (undertaking for collective investments in transferable securities) or management company thereof)
• In order to ensure the orderly settlement of the Securities Lending Transactions the enterprise must have entered into a tri-party agreement concerning the delivery of non-cash principal collateral with Eurex Clearing AG and a Tri-Party Collateral Agent.

Holder of a Specific Lender License are exempted from the following:

• Proof of liable equity capital
• Contribution to Margin
• Contribution to the Clearing Fund

No trader exam required; individual GUI training is offered.

All Eurex Repo participants are classified as professional customer according to § 31a part 2 WpHG (Wertpapierhandelsgesetz, Securities Trade Act).
 

Instruments

CCP eligible Loan Securities

Selected components of:

• Equities: HDAX, SMI, SMIM, CAC40, BEL20, AEX25, FTSE100
• Fixed Income: European Government Bonds, Corporate Bonds, Covered Bonds
• ETFs

CCP eligible Principal Collateral
 

Cash Collateral

EUR and USD

Non-Cash Collateral

The Lending CCP eligibility profile includes the following asset classifications:

• Central Government Bond Issues
• Supranational Issuers
• ECB-eligible Non-Central Government Bonds & Corporate Bonds as announced by ECB in the EAD list
  • EUR, CHF, DEM denominated
  • Ratings: AAA to BBB (ratings as assigned in the environment of Clearstream and Euroclear apply)
  • Structured Bonds e.g. ABS, MBS, covered bonds are excluded
• Equities - selected indexes from European, Asia Pacific and North America
• ETFs – selected ISINs

The Eurex Clearing eligibility profile is applied by Tri-party Collateral Agents to select the Principal Collateral assets at the Tri-party Collateral Agent's environment for the Lending CCP service.

Standardized principal collateral baskets

Eurex Repo recommends four standardized baskets which are aligned with the GC Pooling baskets and the SecLend Principal Collateral Universe of Eurex Clearing: 

• SecLend ECB: Subset of the GC Pooling ECB Basket, ~3,000 ECB eligible securities
• SecLend ECBEXT: Subset of the GC Pooling ECB EXTended Basket, ~11,000 ECB eligible securities
• SecLend INTMXQ: Subset of the GC Pooling ECB INTMXQ Basket, ~1,800 eligible securities
• SecLend Equities: Subset of the GC Pooling ECB Equity Basket, ~100 international equities

These baskets can only be set up with Clearstream Banking as Tri-party Collateral Agent.

Depending on the number of participants using these baskets, it is intended to launch an anonymous trading segment within the SecLend Market.

Please find the Product Specifications under Rules and Regulations