Amendments to the Clearing Conditions of Eurex Clearing AG - Consultation

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) regarding the following topic:

• Introduction of the concept of Clearing Capacities with the provision to allow Eurex Clearing to assign Clearing Capacities to Clearing Members under strict requirements in a Default Management Process

The amendments to the Clearing Conditions are subject to a consultation process (Consultation). The Consultation will end with the expiry of 22 April 2024 (Consultation Period). The planned effective date of these amendments is 3 June 2024, depending on the outcome of the Consultation which will be communicated in a separate Eurex Clearing Circular.

2. Required action

Clearing Members, ISA Direct Clearing Members, Disclosed Direct Clients, vendors and other affected contractual parties should take the amendments to the Clearing Conditions into consideration.

Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.

3. Details 

Introduction of the concept of Clearing Capacities with the provision to allow Eurex Clearing to assign Clearing Capacities to Clearing Members under strict requirements in a Default Management Process

Clearing Capacities are a composition of product types with comparable product properties falling under the same Clearing License as determined by Eurex Clearing. A Clearing Capacity is a notion to indicate which products a Clearing Member and Exchange Member is able to trade and clear.

In case of a default of a Clearing Member, Eurex Clearing initiates a Default Management Process with the objective to balance the clearing house after the default. The Default Management Process is conducted on the basis of Liquidation Groups.

As the margin methodology of Eurex Clearing grants margin offsets for positions within the same Liquidation Group, also the Default Management Process is performed on the basis of such Liquidation Groups, with the consequence that the terminated positions of the defaulted Clearing Member are liquidated within such Liquidation Groups via so-called Independent Trades or Default Management Auctions. The counterparty to an Independent Trade or, in case of a Default Management Auction, the auction winner is only able to take over the auction portfolio if such Clearing Member has the Clearing Capacities for all Transactions forming part of the relevant auction portfolio assigned.

To facilitate the establishment of the new Transactions between Eurex Clearing and the auction winner, the proposed amendments to the Clearing Conditions introduce a right for Eurex Clearing to assign Clearing Capacities during the Default Management Process. To protect the interests of the Clearing Members, the entitlement by Eurex Clearing AG to assign a Clearing Capacity will be conditional upon strict requirements. An assignment of additional Clearing Capacities can only occur, if the relevant Clearing Member fulfils all Clearing Capacity requirements and, particularly, is able to comply with any specific settlement requirements, reporting duties or applicable tax-related requirements.

To reflect the amendments, the following provisions in the Clearing Conditions shall be amended:

• Chapter I Part 1 Number 2.1.1 and
• Chapter I Part 1 Number 7.5.3 (3) (viii)

Consultation with respect to the proposed amendments to the Clearing Conditions

Pursuant to Chapter I Part 1 Number 17 of the Clearing Conditions, the proposed amendments to the Clearing Conditions are subject to a Consultation which will end with the expiry of 22 April 2024. 

Eurex Clearing herewith invites all Affected Customers to submit comments on the proposed changes and amendments within the Consultation Period.

During the Consultation Period, comments on proposed changes or amendments shall be only submitted through a web-based commenting service for which a registration form is available on the Eurex Clearing website under the following link: 

Find > Forms: Consultation Form

The form has to be duly signed and returned to Eurex Clearing via e-mail to SpecialProvisions@eurex.com, in order to obtain a User ID and Password together with a link for accessing the web-based commenting service.

To the extent that Eurex Clearing AG decides to implement any comments received during the Consultation, the so-amended version of the Clearing Conditions will be published after the Consultation.

The currently envisaged effective date of the changes is 3 June 2024. However, after the Consultation Period, Eurex Clearing AG will issue a separate circular to announce the concrete date on which the proposed changes (as the case may be, implementing comments received during the Consultation) will come into effect. 

This announcement will be made with at least 15 Business Days’ notice (Regular Notification Period). However, if Eurex Clearing AG should receive a request for a Prolonged Notification Period from more than two Affected Customers during the Consultation Period, a Prolonged Notification Period as set out in the Clearing Conditions will be applied and Eurex Clearing AG will notify all affected parties accordingly.

Publication of amendments

As of the effective date, the full versions of the amended Clearing Conditions will be available for download on the Eurex Clearing website www.eurex.com/ec-en/ under the following link:

Rules & Regs > Eurex Clearing AG 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 prior to the relevant effective date(s) as stipulated in this circular. In case of an objection by the respective contractual party pursuant the preceding sentence, Eurex Clearing AG is entitled to terminate the respective contract (including a Clearing Agreement, if applicable). Instead of submitting an objection, the respective contractual party may submit in writing to Eurex Clearing AG comments to any amendments of the legal framework of Eurex Clearing AG within the first 10 Business Days after the publication of the amendments. Eurex Clearing AG shall assess whether these comments prevent the published amendments from becoming effective taking into account the interests of Eurex Clearing AG and all contractual parties. 

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, as applicable.

Attachment:

• Amended sections of the Clearing Conditions of Eurex Clearing AG, effective 3 June 2024 (subject to the Consultation)

Further information