Eurex Clearing
1. Introduction
This circular contains information with respect to the service offering of Eurex Clearing AG (Eurex Clearing) and introduces amendments to the Clearing Conditions of Eurex Clearing AG (Clearing Conditions) and to the Price List of Eurex Clearing AG (Price List) regarding the following topics:
A. Introduction of the CSDR Settlement Discipline Regime (Penalty Regime),
B. Discontinuation of the Routing Service for C7 Securities Clearing Service (C7 SCS), and
C. Minor amendments to the Clearing Conditions due to harmonization of wording and referencing
The amendments under item A. will become effective as of 31 January 2022.
The amendments under items B. and C. will become effective as of 1 February 2022.
Learn more about C7 SCS Release 1.0 on our dedicated Initiative Page under the following link: Support > Initiatives & Releases > C7 SCS Releases > C7 SCS Release 1.0. System documentation, circulars and much more information is available there for you.
2. Required action
Clearing Members which currently use the Routing Service for Hold/Release management of transactions settled on Clearstream Banking Frankfurt international (CBF-i) 6-series accounts are advised to make use of the Hold/Release functionality directly offered by Clearstream Banking Luxembourg (CBL).
3. Details
A. Introduction of the CSDR Settlement Discipline Regime (Penalty Regime)
The regulatory background for the introduction of the CSDR Settlement Discipline Regime (SDR) is the Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and is complemented by various Implementing Technical Standards and Regulatory Technical Standards (RTS), in particular, the Commission Delegated Regulation (EU) No 2018/1229 supplementing Regulation (EU) No 909/2014 with regard to regulatory technical standards on settlement discipline (as amended from time to time).
With the upcoming EU-wide CSDR SDR launch on 1 February 2022, only the Penalty Regime will come into force in a first step, as the mandatory Buy-in Regime is expected to be postponed, as announced by the European Commission in November 2021, to a later time after 1 February 2022.
CSDR SDR affects both securities clearing systems of Eurex Clearing, the C7 Securities Clearing Service (C7 SCS) for transactions at the Frankfurt Stock Exchange and transactions concluded at Eurex Deutschland that result in physical securities transactions, as well as the Securities CCP system for Eurex Repo market and BrokerTec transactions.
With the introduction of the CSDR penalties, (I)CSDs calculate/provide penalties for settlement accounts of Eurex Clearing. Eurex Clearing provides new CSDR-specific daily and monthly penalty reports on Clearing Member level. Monthly net penalty amounts will be calculated by Eurex Clearing on Clearing Member/CSD account/currency level. Penalty collection/distribution will be performed by Eurex Clearing on a monthly basis in sync with the CSD’s OTC business.
To reflect the regulatory changes with the introduction of the CSDR Settlement Discipline Regime (Penalty Regime), the following provisions of the Clearing Conditions will be amended as outlined in the Attachments 1 to 4:
B. Discontinuation of the Routing Service for C7 Securities Clearing Service (C7 SCS)
On 27 September 2021, Eurex Clearing introduced the Routing Service to offer customers a possibility to partially release pending delivery instructions related to instruments in Non-Collective Safe Custody (NCSC) settled via Clearstream Banking Frankfurt International (CBF-i) 6-series accounts in Creation.
On 22 November 2021, Clearstream Banking Luxembourg (CBL) introduced a new partial release functionality so that customers can partially release their delivery instruction directly in Creation via MT530 or in Xact Web Portal as communicated in Clearstream Announcement A21055. With this service offering by CBL, the Routing Service in C7 SCS has become redundant.
With the introduction of the CSDR Penalty Regime as of 1 February 2022, continuation of the Routing Service could lead to a double penalization for late deliveries. Due to the “cancel/re-instruct mechanism” applied by the Routing Service, a release, a hold, or a partial release of a late trade would lead to one or two re-instructed transactions with the same settlement date triggering a Late Matching Fail Penalty (LMFP). Such LMFP would be triggered in addition to the already charged Settlement Fail Penalty (SEFP) for the cancelled late delivery instructions. To avoid such double penalization, the Routing Service shall be discontinued as of 1 February 2022.
PLEASE NOTE: Although Eurex Clearing will decommission the Routing Service as of 1 February 2022, the Routing Service functionality will – from a technical perspective – still be available as of 1 February 2022. Irrespective of the technical availability of the functionality, the Routing Service is decommissioned as of 1 February 2022 and shall not be used as of 1 February 2022. Any Clearing Member, which continues using the Routing Service functionality as of 1 February 2022, shall remain fully responsible and fully liable for any continued use of the Routing Service (i.e. any LMFP).
To reflect the discontinuation of the Routing Service, the following provisions will be amended as outlined in Attachment 5 and Attachment 6:
C. Minor amendments to the Clearing Conditions due to harmonization of wording and referencing
Eurex Clearing proposes further minor amendments to its Clearing Conditions to further streamline its legal framework. For the amendments in detail, please refer to the Attachment 5:
Publication of amendments to the Price List and the Clearing Conditions
As of the effective dates, the full versions of the Clearing Conditions and Price List will be available for download on the Eurex Clearing website www.eurex.com/ec-en/ under the following link:
Rules & Regs > Rules and Regulations
The amendments to the legal framework of Eurex Clearing AG published by this circular are deemed accepted by each affected contractual party of Eurex Clearing AG, unless the respective contractual party objects by written notice to Eurex Clearing AG within the first 10 Business Days after publication. Any ordinary right of Eurex Clearing AG to terminate the respective contract (including a Clearing Agreement, if applicable) shall remain unaffected.
Unless the context requires otherwise, terms used and not otherwise defined in this circular shall have the meaning ascribed to them in the Clearing Conditions or FCM Clearing Conditions of Eurex Clearing AG, as applicable.
Attachments:
Further information
Recipients: | All Clearing Members, Basic Clearing Members, Disclosed Direct Clients of Eurex Clearing AG and vendors | |
Target groups: | Front Office/Trading, Middle + Back Office, IT/System Administration, Auditing/Security Coordination | |
Related circular: | Eurex Clearing circulars 037/21, 069/21, 072/21 | |
Contact: | client.services@eurex.com | |
Web: | Support > Initiatives & Releases > C7 SCS Releases > C7 SCS Release 1.0; | |
Authorized by: | Jens Janka |
